AMP Freezes 873-MW Gas Peaking Facility on Financial Uncertainties

Plans to build an 873-MW natural gas peaking facility at FirstEnergy’s Eastlake Plant in Ohio have been frozen on uncertainties that affect project financing—including the federal "sequester"—its developers FirstEnergy and American Municipal Power (AMP) said last week.

The companies in February 2012 signed a nonbinding memorandum of understanding to build and operate four combustion units at the site in Eastlake, Ohio. Last week, however, AMP said it is unlikely the project will proceed. "As an example, the future of tax-exempt and tax-advantaged financing is in question and some of AMP’s projects have already seen increased interest costs because of the federal ‘sequester.’"

The project had many "positives" as well as some challenges, but "continued regulatory uncertainty" that worsened this financial uncertainty heavily impacted AMP’s decision, said Marc Gerken, president of the nonprofit wholesale power supplier.

AMP was to provide construction financing and own 75% of the generation output upon completion in 2016, while FirstEnergy was to fund and own the remaining output.

Sources: POWERnews, AMP

NOTE: This story was originally published on May 13