Batavia hires power plant suit lawyers to advise it

Batavia is hiring the law firm that sued entities last year over the advice they gave city officials regarding investing in an electrical power plant.

Doing so could help the city figure out whether it wants to pursue legal action against consultants and the plant over the higher-than-expected cost of electricity produced by the Prairie State Energy Campus.

The mayor and the city clerk will negotiate the agreement with the Childress Duffy firm of Aurora.

Hiring the firm as counsel will enable the city to share confidential documents with the firm. City officials are bound by confidentiality agreements with the owners of the Prairie State Energy Campus, including the Northern Illinois Municipal Power Agency (NIMPA), about the operations and finances of the plant and its coal mine. Municipal power entities from throughout the Midwest own the plant, and its original owner and developer Peabody Energy still retains a 5 percent share. Batavia, Geneva and Rochelle make up NIMPA.

"We all do take this seriously. This is just another step in some type of resolution or some type of remedy to the situation that we are currently in," said Alderman Alan Wolff about complaints about the electrical deal.

A federal judge in August dismissed the class action suit that nine utility customers had brought last year against the entities that advised Batavia about the plant. The judge said the plaintiffs couldn't sue because they weren't the ones who made the decision to invest in the plant.

The suit named NIMPA, Batavia, Geneva, Rochelle, plant builder Bechtel Corp., Peabody Energy, the plant's management committee and the other plant owners as respondents in discovery, as Childress Duffy tried to pry out information about how the deal was made. It never got to the point, however, where they had to provide any of the documents the lawyers wanted.

Batavia invested $240 million toward the building of the plant, which came online in 2012. It is obligated to buy a fixed amount of power from the plant for 30 years, whether it needs all the electricity or not.

Customers' bills have risen, as the cost of power turned out to be more than expected. And when the city tries to sell its excess power, it is doing so at a loss because it costs more than that produced elsewhere.

Prairie State consists of a coal mine and two generation plants.

The suit contended the entities hired to advise Batavia, including the Indiana Municipal Power Agency, "negligently misrepresented" the cost of building the plant; the time it would take to build it; the cost of the power it would produce; the amount of power it could consistently produce; the viability of using high-sulfur, high-ash coal to fuel the plant; maintenance issues that would arise from using such coal; the impact of not having an experienced builder/operator for the plant involved; the "skyrocketing" cost of plant construction in the United States at the time; that the advertised cost of electricity was not attainable; the risk of obtaining too much of the city's electricity from Prairie State; and that "state-of-the-art" custom-made equipment would be used, when the equipment was obtained from a canceled Texas project and was designed to burn a lower-sulfur coal. The suit said Peabody Energy's main business is coal mining, and it was looking for a way to use a large reserve of southern Illinois high-sulfur, high-ash coal. Peabody had difficulty selling the coal in the United States.

In May 2004, Batavia hired the Indiana Municipal Power Agency's consulting subsidiary to study electrical-supply options, as its contract with ComEd was due to expire. The suit said IMPA consultants did not tell Batavia officials that the agency itself had decided to invest in the power plant.

The suit also contended that IMPA consultants imposed an "arbitrarily short decision deadline" on Batavia in April 2007 to commit to the plant. It also said the consultants knew as early as 2005 that the plant could not produce electricity for the $46 per megawatt hour they told Batavia officials. The lawsuit contended that costs have risen as high as $179 per megawatt hour.