A planned Southern Maryland power plant that was to be built with state help — an arrangement that set off an industry fight — landed financing Friday to start construction despite a court ruling quashing the assistance.
Silver Spring-based Competitive Power Ventures and its partners said they received financing from 15 lenders, including GE Energy Financial Services, which anchored the effort. Major construction on the $775 million Waldorf plant is expected to start in September.
It's moving forward without the revenue backstop Maryland's Public Service Commission envisioned when it ordered in 2012 that customers of Baltimore Gas and Electric Co. and two other utilities would subsidize the CPV plant if its major revenue fell below a set level. If the revenue rose above that amount, which the commission projected would happen on average over the life of the 20-year contract, customers would receive a bill credit.
Commissioners were worried about electric reliability. They also contended that the existing system to incentivize power-plant development in the region was costing Marylanders hundreds of millions of dollars for nothing.
But other power-plant owners in the region called the arrangement unfair to the rest of the market and bad for consumers. They sued and won on the grounds that Maryland's commission trod on territory reserved for the federal government. In June a federal appeals court upheld an earlier ruling invalidating the arrangement.
But the plant is moving ahead. CPV's chief financial officer, Paul Buckovich, said more lenders are now willing to finance projects like the Waldorf plant, but he said the appetite is "finite," the deal requires the company to refinance just five years after starting operations and the cost is substantially higher than it would have been if CPV came to lenders with the 20-year contract in hand.
"The financing is much more expensive and less beneficial to sponsors and ultimately to the ratepayers," he said.
CPV and Japanese firms Marubeni Corp. and Toyota Tsusho, the natural-gas-fired plant's co-owners, said it will generate enough electricity to power 700,000 homes.