Bids to Decommission Missouri City Power Plant Result in Major Cost Differences
/The City Council is considering a $9.7 million proposal to decommissioning the shutdown Missouri City Power Plant even though a bid for approximately half that amount was received from another qualified firm.
The higher proposal, received from Environmental Operations Inc, is on the City Council agenda for first reading Monday, June 18th. Two readings are required and approval could occur at the July 10th meeting.
The matter received extensive discussion at the June 15th Public Utilities Advisory Board (PUAB) which voted 4-1 against recommending the higher bid to the City Council. Board members raised several questions about why the lower bid from Commercial Liability Partners was not acceptable.
The city wants to close out the old power plant which began operations in 1954 and which stop generating power in September 2015. The coal power plant, located in Clay County, sits on 87 acres on the Missouri River.
Earlier 2015 engineering studies indicated the cost for closing out the power plant couldtop $17 million to dismantle and sell the site which also includes a recently closed coal ash pond. The ash pond closure project cost approximately $2 million.
Subsequently, the city began exploring options to demolish and the transfer the environmental risks to a third party based on a presentation it heard from Environmental Operations in June 2016.
The city issued a formal RFP in this February. Three bids were received by the March 31 deadline. Environmental Operations and Commercial Liability Partners submitted proposals. One proposal was considered non-responsive.
City staff, during the PUAB meeting and in city council documents, said they were directed by the City Council on May 15, 2017 to negotiate a contract with Environmental Operations which resulted in the contract currently before the City Council.
During the PUAB meeting, Independence Power and Light staff said they did not check references, contact or interviewCommercial Liability to explain or clarify any questions or concerns about the substantially lower cost bid.
Commercial Liability Partners bid was $4.25 million compared to $8.9 from Environmental Operations.
The ordinance approving Environmental Operations is for $9.765 million. The St. Louis-area firm requested additional funds based on recent on-site field work which found asbestos and other environmental risks needing abatement.
IPL staff indicate costs for the Missouri City project would be paid from available cash reserves, but those costs would be recovered through higher utility charges. IPL has 57,000 customers.
PUAB members expressed concerns they were unable to properly fulfill their city charter responsibilities because the City Council had already decided who should receive the contract prior to review by the seven-member city utility board.
The City Council is not obligated to follow the PUAB's recommendation.
PUAB opposition to the City Council's position is a relatively rare occurrence.
The PUAB has extensive responsibilities under the City Charter to make sure the city utilities are managed in a businesslike manner.
If awarded, the Missouri City contract would be one of the most largest city contracts in recent years.
Key documents on the Missouri City project are available on the Indy Energy website.