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Benton approves power contract that saves 30% on wholesale rate

November 26, 2012

Benton City Council met a critical deadline Monday night in approving a new power supply agreement that will result in significant savings to the city while ensuring delivery of electrical power to Benton Utilities customers for years to come.
All of the nine aldermen in attendance voted for the measure that has been under negotiation for some time. Alderman Joe Lee Richards was not present, so his vote will be recorded as an automatic "no" to Alderman Doug Stracener's motions for approval.
The terms of the contract were good only until 9 p.m. Monday, so council members were keenly aware of the need to stay on task. The issue, which involved several resolutions and an ordinance, initially had been scheduled for action toward the end of a long agenda. However, through a council vote, the issue was moved near the beginning of the session.
Also, the council members agreed to presentation of the documents "by title only," rather than requiring full readings by City Clerk Cindy Stracener.
Mayor David Mattingly noted today that "Benton Utilities has been working diligently for the past year to secure a low-cost and reliable wholesale power agreement to supply the city’s electrical power needs."
"Last night, the results of these efforts were presented to the City Council for review and approval," Mattingly said.
He explained that GDS Associates, out of Marietta, Ga., evaluated all of the proposals, and presented recommendations for council consideration.
"GDS recommended base load capacity out of Plum Point Unit One located in Osceola, in combination with a wholesale energy agreement for the balance of needs from Constellation, which will take effect April 1, 2014, and will remain in effect until May 31, 2019," Mattingly explained.
The agreement for the base load five (5) megawatts out of Plum Point 1 will be for the life of the unit, which begins April 1, 2014, and is estimated to remain operational through 2050.
"The combination of these two agreements, plus transmission and distribution costs, will give us a new combined wholesale rate of approximately $57 per megawatt hour," the mayor said. "This will equate to an estimated 30 percent reduction in the wholesale cost for energy to the city.
"The actual retail and commercial rate structure will not be completed until February 2013, but we do know both commercial and residential rates will be reduced," he said.
Mattingly pointed out that the legal work on the contracts and agreements has been performed by Spiegel and McDiarmid out of Washington, D.C., as well as attorney Zachary David Wilson of North Little Rock, who worked on Plum Point 1 agreements.
"Although the actual rate affecting your home or business utility bill will not go into effect until April 1, 2014, the announcement of these reductions signals relief to all who are served by Benton Utilities and bodes well for continued growth of our local economy," Mattingly said. "It cannot be underestimated how important these reductions are and how they enhance our ability to compete with other cities in Central Arkansas."
The mayor expressed appreciation to the Benton Public Utilities Commission and to Benton Utilities General Manager Terry McKinney and his staff "for their persistence in delivering a contract which helps all the citizens of Benton by assuring a reliable energy source at competitive prices."
Before the council voted on the agreement, Alderman David Sparks asked for advice from Rob Livers, chairman of the Public Utilities Commission.
"I just want to make sure we're doing the right thing," Sparks said.
Livers assured the council that he "absolutely" supports the agreement.
Several of the aldermen expressed their appreciation to those who worked to obtain the new contract.
Making favorable comments were Aldermen Brad Moore, Bill Donnor and Stracener.
"This is something the city can be proud of," Stracener said.

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