The AES Corporation’s decision to walk away from its new power plant in Londonderry is beginning to settle in.
For some, its an unfortunate consequence of deregulation.
But for others, the decision could have more immediate effects.
New Hampshire Public Radio’s David Darman has more.
Before it made the decision to disown its power plant, AES Corporation negotiated lower property tax payments to the town of Londonderry.
Andre Garron is the town’s director of planning and economic development.
He says Londonderry will likely need to make cuts to its 25 million dollar budget, because the company pays about 5 million dollars a year in taxes.
And I know right now that just hasn’t been done because we recently resolved the tax issue with aes and they will be paying their taxes. So, at least for the short term, that doesn’t seem to be an issue. For the long term, I don’t know. I guess that hasn’t reared its head yet.
AES officials say they’re leaving their new plant behind because its losing money.
Greg Smith is an attorney from the company.
He says the losses can be blamed on incomplete deregulation of the industry, which was halted when California’s power crisis unfolded in 2001.
…so given that we have a partially deregulated market, no one could have expected this when this plant was cited, not the state regulators, not the proponents
But one of the key architects of New Hampshire’s deregulated power market says it is working just the way it should.
Congressman Jeb Bradley helped design much of the system during his tenure in the legislature.
Well, that’s how the private system works, and certainly what we strove to create.
In 2004, producers have had to accept lower prices for electricity than in past years, because there’s an oversupply of power.
Tom frantz directs the electric division at New Hampshire’s Public Utilities Commission.
He says AES didn’t count on lower prices combined with high natural gas costs when the company built the Londonderry plant.
09 09 …that’s certainly higher today than I think most people thought it would be back in the late 90’s and early 2000. natural gas prices are running at 5 to 6 to 7 dollars per million btu, and that’s a price that’s much higher than people anticipated back then. 09 30
Despite AES’s decision to back out of its power plant in Londonderry, Frantz says he doesn’t think the plant is going to shut down.
He says the virtues of plant are just too much for investors to ignore.
….I’m fairly confident that when you have a brand new, combined cycle facility like that that’s been put into operation in the last year and a half, really in the last year, someone will probably step forward and look at that as an attractive power plant and I wouldn’t be surprised at all if a number of people down the road were interested in purchasing it.
AES officials have said they expect the plant to operate until a buyer emerges for it.
But that may be little comfort for Londonderry’s taxpayers.
They may still be stuck making up tax revenues lost when AES renegotiated its tax bill.
