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Council hears presentation on proposed 15‑year power purchase with Potomac Energy Center
Summary
City staff recommended that Lebanon enter a 15‑year power purchase agreement with American Municipal Power/Potomac to secure a 10 MW block (option +5 MW) starting June 2026; staff said the contract would lock a portion of the city's wholesale power at a projected average near $59.67/MWh and that RGGI (carbon) costs would be passed through if enacted.
The deputy director of electric told the Lebanon City Council on March 24 that staff recommends entering a 15‑year wholesale power purchase agreement with American Municipal Power to buy a 10‑megawatt block of base load power from the Potomac Energy Center starting in June 2026, with a provision to acquire up to an additional five megawatts if available. The presentation said the purchase would cover about 14% of the city’s power needs and would be part of a mixed portfolio strategy intended to reduce volatility in the city’s power cost adjustments.
The deputy director described the city’s current contract coverage by year and said locking a long‑term block helps stabilize customer rates. He presented an estimated 15‑year average price near $59.67 per megawatt‑hour (before adjustments) and explained a range of roughly $63.67 to $68.67/MWh that factors in possible RGGI (carbon) charges and regional adjustments. He advised council that any RGGI costs would be passed through to purchasers of the power under the contract.
Council members asked about consequences of being "long" — purchasing more power than immediate need — and staff said the city could sell surplus back into the market if usage falls short. Members questioned rising transmission costs and were told higher transmission spending and limited new generation supply are primary drivers. Staff also contrasted Lebanon's wholesale and retail costs with larger regional utilities to show relative competitiveness.
The deputy director recommended adopting Ordinance 2026‑028 to authorize the city manager to execute the agreement and requested emergency language for second reading on April 14, 2026, to lock the pricing for the proposed block. Council moved for first reading of the ordinance; no final approval or contract execution occurred at the March 24 meeting.
Next steps: the ordinance was scheduled for second reading on April 14, 2026, at which council could vote to adopt or decline the agreement.
