The Public Utilities Advisory Board for Independence received its answers Thursday from the City Council. It now hopes to be given time to review those answers before it issues another recommendation to the council regarding the Missouri City power plant.
In question is a proposed contract with Environmental Operations, Inc. for $9.7 million to take over ownership and demolish the coal-fueled plant vacated in 2015 and assume all environmental liability. That bid is more than twice what the other respondent had offered – Commercial Liability Partners at $4.25 million – and is higher than EOI's initial figure of $8.99 million due to further environmental risk that EOI found upon inspection.
The PUAB had compiled a list of 18 questions after its June 15 meeting, when it believed Independence Power & Light staff had not provided sufficient reason to go with a contract substantially higher and voted not to recommend the contract.
The council, which is obligated to provide answers to the PUAB but is not bound by the board's recommendations, could vote to approve the contract or take alternative action Monday. During Thursday's meeting, the PUAB voted to recommend the council postpone a vote on the Environment Operations contract.
Scott Roberson, one of two council members not in favor of the contract, has suggested the council at least wait on Missouri City until it sees the audit on IPL due within the next few weeks. The majority of council members in favor of Environmental Operations wrote the answers given to PUAB.
In those answers, the council said the evaluations made during the request for qualifications and request for proposal processes, as well as city staff recommendation, led to the majority of the council directing IPL to negotiate with EOI as better choice to fully complete the project. It chose not to attempt negotiations with CLP as well due to time and expense.
State law permits discussion of sealed contract bids in closed executive session, and the council took no votes during the May session when it discussed bids. The council told PUAB that disclosing details from that discussion could hinder ongoing negotiations, and possibly future negotiations with another vendor if needed.
In response to a questions about the project's urgency, even with no immediate environmental issues at Missouri City and other costly projects on the horizon, the council said it sees this project as an chance to get rid of a “distressed asset without undue delay,” and even with higher bid it could do so at far less than a 2015 engineer's estimate of $17 million to demolish. In time, the council said, inflation inevitably will raise the price of such a project.
Prior to its recommendation, the board heard presentations from Andy Boatright, IPL's acting director and Environmental Operations CEO Stacy Hastie, as well as concerns from several citizens.
Those concerns mainly centered around two issues – the process by which Environmental Operations became the preferred vendor despite the higher bid, and whether the cost for the contract will be passed on to ratepayers in order to replenish IPL's cash reserves. The city has stated its desire to replenish if the contract goes through, but city officials emphasize that any decision of how to do so will be for a later date.
If it came to pass, an environmental surcharge, Mary Jo Moore of the Eastern Jackson County Justice Coalition said, would “shift the burden to people who can least afford it.”
“To me, the key terms are due diligence and disclosure,” said Doug Goodwin, an executive with Ronson Manufacturing. “There's an iceberg here with too many questions. Ronson doesn't want to pay for $5 million excess spending.”
Brent Schondelmeyer of the citizens group Indy Energy said the vendor preference flies against the council's recently adopted resolution for financial policies.
“I don't believe the spirit of that has been followed,” he said, adding that solar and wind energy are renewable, “Public trust can be a scarce resource. If damaged, it can be hard to recreate.”
“I'm not opposed to decommissioning of the plant,” fellow Indy Energy member Roger Hershey said. “I'm opposed to proceeding without sufficient information.”
Boatright noted that EOI has done several successful environmental remediation projects in Missouri and that it possesses good financial strength and subcontractor records.
Hastie addressed concerns of his and his company's history, which rose from a recent St. Louis Post-Dispatch article, which he said was “politically connected.” The felony conviction for operations of his company stemmed from more than 20 years ago, he said, when he took a shortcut to obtain an asbestos training certificate he and others believed he already was over-qualified for. Issues with some projects came from factors beyond his control, he said, and in another case he paid extra to correct a subcontractor's illegal dump after learning about it.
“We have started and completed many risk assumption projects,” Hastie said, noting that Missouri City was a potential project his firm had looked at for two years and made numerous visits for it.
“We actually put together work plans and project specifications for local companies,” he said. “There's still some potential risk in the (covered) ash ponds, but we have insurance in case of new regulations. We're hoping the deal of capping is sufficient.”
PUAB Member Garland Land called the meeting enlightening but said he needed time to digest what he heard, echoing Goodwin’s iceberg analogy and the need for more questions.
“We don’t know what’s below the water here,” he said.
Council members Scott Roberson and Karen DeLuccie penned a dissenting response that the PUAB also received. They said the city has done everything required thus far to shut down Missouri City and is under “no obligation or order” to move forward on the project at this time, and they considered other costly investments such as the Advanced Metering Infrastructure and repairs or replacements for the Blue Valley plant and other infrastructure on the near horizon as more pressing needs.
Also, the two council members said the entire review and recommendation process was “made in haste with insufficient information” to justify the council's majority direction. While EOI had far more experience than CLP, the latter's CEO had many years of experience, including service with EOI, so more importance should have been placed on the cost. City staff, they said, should have been directed to attempt a contract negotiation with CLP.