COLUMBUS — In a recent letter drafted to the 81 member communities signed up to invest in the American Municipal Power Generation Station, American Municipal Power-Ohio’s chief executive officer, recently addressed how the economy is impacting the project.

Mark Gerken stated: “Despite the downturn in the economy, AMP-Ohio issued a billion dollars in project financing in 2008, including issuing $760 million in bonds for the Prairie State coal generation project.”

Gerken went on to say: “AMP-Ohio has positioned itself well in terms of the AMPGS project. Our commercial paper program and line-of-credit give us the ability to wait for a more optimum time to go to the bond market for permanent financing. We’re not being forced into the market prematurely.”

Gerken also said another aspect of the current economic downturn that will benefit the project is a “significant softening of the commodities market.”

He added: “In recent months the price of steel and other raw materials has been decreasing, a fact that will benefit this project and will also have a positive impact on the construction schedule.”

Gerken also addressed criticism of the AMPGS cost estimate made by opponents.

“These activist groups have mis-characterized cost estimates for the project in an effort to bolster their rhetoric,” Gerken said.

He went on to say the initial cost estimate of $1.2 billion was an “off-the-shelf estimate,” was not specific to the AMPGS project and didn’t include all elements of the projects such as transmission upgrades and Powerspan.

Gerken said the more accurate comparison is the $2.5 billion estimate in June 2007 in the initial AMPGS project feasibility study performed by RW Beck, the project’s owner engineer. This was the first estimate specific to the project that included all development aspects, according to Gerken.

“The study has since been updated twice, the last time in October 2008,” Gerken wrote. “The estimate of $3.25 billion released at that time was based on indicative pricing from Bechtel Power, the EPC contractor retained for the project. It included the updated costs for the use of Powerspan and other costs not included in previous projections. It also included contingency and escalation reserves of over $560 million to mitigate the potential impact of future cost escalations.”

Gerken said in each of the feasibility studies, AMP-Ohio consultants looked at the cost of power from the AMPGS facility compared to market costs both with and without the impact of carbon regulation.

“Both comparisons showed the cost of power from the facility would be below market costs,” Gerken said.