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Power plant closure financially 'devastating' for community, school district

Zimmer's closure is 'a punch in the stomach.'
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Posted at 2:14 PM, Aug 17, 2021
and last updated 2021-08-17 20:55:13-04

MOSCOW — For decades Clermont County was flush with tax revenue from two coal power plants perched along the Ohio River. It paved roads, built new fire stations and schools, opened a community center, and replaced household septic tanks with municipally treated water.

But the last of that coal revenue is evaporating much sooner than anticipated. Texas-based Vistra Corp. announced in July that the William H. Zimmer plant in Moscow will close five years early, by May 2022.

Zimmer will be the sixth coal-burning power plant in the region to close since 2013, a trend that’s driven by the increasing cost of complying with air-pollution rules and cheaper energy sources like natural gas.

The closures are the subject of a year-long series of reports by the WCPO 9 I-Team, Closed and Undisclosed.

“We lived with it," said Moscow Mayor Tim Suter. "We flourished with it. We’ll flourish again. It’s going to be a little rough for a while, but we’ll be fine.”

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Moscow Mayor Tim Suter

The village could eventually lose 90 percent of its revenue once Zimmer closes, Suter said. The plant is the only economic driver for the village, which has 185 residents.

“We live and die with the facility next door, basically,” Suter said. “It’s sad. Devastating. We’ve just got a job to do now and it’s not going to be pretty. People need to understand that.”

Village officials have already added new trash and wastewater treatment fees for residents, and cut council members pay in half, from $300 to $150 per month.

“We’ve condensed our employees down as far as we can go,” Suter said. “We’re actually on an accelerated plan to do away with our employee health care and give them a stipend.”

Local officials like Suter are closely watching Zimmer’s property valuation, both this year in the years to come. That will directly impact how much tax revenue municipalities and schools receive.

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The Zimmer coal plant in Moscow will close by May 2022.

“What we need to know is what the final number is going to look like,” said Dennis Cooper, chairman of the Washington Township Board of Trustees. “We won’t know that until next year.”

A Vistra spokesman said the company is open to discussing its valuation after retirement, and a potential multi-year tax agreement with Clermont County that could reduce taxes gradually.

“In this case it would make sense to have kind of a stair step so that your local governments, especially the schools, wouldn’t take a real sudden hit,” Brad Watson, Vistra’s director of community affairs, told WCPO during a July interview. “We care about our communities and this is one way that we try to help them out.”

But Vistra is also challenging Zimmer’s 2020 property valuation and seeking a lower tax bill at a Board of Revision hearing on Sept. 16.

“Although Zimmer’s market value has been falling for several years as the plant struggled financially, there has been no corresponding drop in property tax value,” Watson told WCPO last month. “While Vistra is committed to pay its fair share of property taxes, the valuation of the Zimmer plant does not currently reflect fair market value … To that end, we will continue to pursue a fair valuation for the 2020 tax year and beyond.”

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Vistra Corp announced it will close the Zimmer plant by May 2022.

Zimmer’s devaluation has reduced its property taxes from $11 million in 2015 to $4.7 million in 2019, according to data from the Clermont County auditor’s office.

That lost tax revenue has already forced deep cuts in Washington Township. Officials consolidated three fire stations into one centralized building, sold off the extra fire stations and cut the township’s workforce drastically since 2016.

“They’ve been devaluing (Zimmer) for the last three or four years,” Cooper said. “In three years, when you lose $700,000 to $800,000 out of your budget, you’ve got to start planning then. You can’t wait until the closure of the plant, that you know is going to come.”

The township currently relies on Zimmer for 30 percent of its revenue. Cooper knows that more cuts are likely once the plant retires.

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Dennis Cooper, chairman of Washington Township's board of trustees.

“I wish I could sit here and say what we’re going to do, but I really can’t,” Cooper said. “We just want to stay viable. We want to be able to maintain what we’ve got.”

At the Grant Career Center, where 8 percent of its budget, or roughly $500,000 a year, comes from Zimmer’s taxes, Superintendent Mike Parry said he is still developing a strategy to make up for the lost revenue.

“The closure of the plant will have challenging revenue implications for Grant Career Center,” Parry said. “While we have been planning for the shuttering of the plant during the 2025 to 2027 timeframe … this new announcement is very unfortunate for our community.”

New Richmond Exempted Village School District Superintendent Tracey Miller said he attended a meeting with Vistra representatives in May, in which they reassured him that they would not retire Zimmer early.

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New Richmond schools superintendent Tracey Miller

“They were adamant about the fact that they were going to commit to staying through 2027 … They gave several examples of how they’ve made recent investments into the plant to keep it operational and functional,” Miller said. “So, I left that meeting feeling fairly good.”

Two months later, on July 19, Vistra announced that it would close Zimmer five years early, by May of 2022.

“It was a tremendous shock,” Miller said. “This wasn’t even on our radar screen.”

School officials had just stabilized the district’s budget after losing millions in tax revenue after Duke Energy closed the Walter J. Beckjord plant in Pierce Township in 2014.

“The pain inflicted, it's real," Miler said. "People lost their jobs. Buildings were closed. Students got redistricted."

New Richmond voters passed a 9.4-mill operating levy in April 2021 to help bridge the loss of the Beckjord coal plant revenue – its first levy since 1977.

Now, with Zimmer’s imminent closure, the school district is facing another deep budget loss – $2 million to $3.5 million in 2023, which is 10 to 15 percent of its budget.

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New Richmond schools treasurer and chief financial officer, Matthew Prichard

“It’s unfortunate that we’ve been down this path before," said Matthew Prichard, treasurer and chief financial officer of the New Richmond school district. “When Beckjord closed we were forecasted in 2019, for this year right now, to be $8 million in deficit spending."

The district cut spending and renegotiated contracts to save money. It re-purposed an elementary school as a middle school and bought a used school bus.

“We were able to reduce a great chunk of that (deficit) … We have about $900,000 we are going to deficit spend this year, which is a $7 million improvement,” Pritchard said.

Now school officials will start planning on how to make up for the loss of Zimmer’s revenue while balancing current issues – such as holding gym class in an un-air-conditioned high school gymnasium.

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New Richmond Schools will lose $2 to $3.5 million per year, starting in 2023, from Zimmer's closure.

Another tax levy is “almost definite,” Miller said.

“It just feels like it’s punch in the stomach after punch in the stomach,” Miller said. “We keep trying to get ahead and then the next shoe drops.”

But a Vistra spokesperson says company officials were clear with New Richmond school leaders about the plant’s financial challenges, and potential for early retirement, during that May meeting.

Then the results of the June 2 PJM capacity auction sealed the early closure.

“Unfortunately, Zimmer did not clear any megawatts in the PJM capacity auction," Vistra spokesperson Meranda Cohn wrote in a statement to WCPO. "These revenues are critical to economic operation. For example, Zimmer received approximately $47 million for delivery year 2021-2022. This fell to zero in the latest auction for 2022-2023. Simply, Zimmer’s economics no longer make it viable to operate.”

Vistra hopes to redevelop the site for renewables or battery storage.

Clermont County expects to lose roughly $929,000 in tax revenue from Zimmer’s closure, starting in 2023.

“While this is a small percentage of the overall $260 million Clermont County budget, it represents 2½ percent of all tax revenues,” said county spokesman Mike Boehmer. “Revenues will be evaluated during the appropriation process toward the end of the year.”

Other expected annual losses include: $85,000 to the county's public library and $112,000 to Monroe Township, according to the county auditor’s office.

“Hopefully you look for what next venture will come out here,” Cooper said.

Cooper would like the state to boost the economy here, either by adding a new bridge to Kentucky or upgrading U.S. 52 to bring more traffic to the area.

He notes that Clermont and Adams counties have lost four coal power plants in less than a decade.

“Four plants go down," Cooper said. "You’ve had Beckjord, Zimmer, Killen and Stuart. Four of them. And if there’s 150 workers at each one of them. You do the math.”

Miller is hopeful that state officials will provide bridge money to offset Zimmer's loss in the short term.

And Suter hopes the Zimmer site is redeveloped into another industry very quickly.

“I’d like to see it done within a few years and not over a 10-year-period,” Suter said.

He also noted that the village still has several lots for sale where private homes can be built.

“It’s a great place to live," Suter said. "If people want to live out here, it’s nice and quiet with a lot of amenities, as of now.”