Finance committee: Power plant revenues fell sharply; model still shows modest positive NPV

Robert Scott, a citizen member of the finance committee, told the Hampton City Council at an afternoon work session that the finance committee’s updated public‑dollar model shows the power plant project’s projected revenues have dropped sharply since the original estimate.

Scott said the committee’s original projection showed gross revenue of $302,000,000 and project costs of $39,000,000 (a net benefit of $263,000,000). Under the committee’s revised, public‑dollars‑only scenario, Scott said revenues are now estimated at about $185,000,000 with costs around $61,000,000. "The biggest single piece is that the meal tax has decreased ... from $78,500,000 down to $56,500,000," Scott said, adding that emission taxes dropped "from 90,000,000 to 3,000,000," changes that together account for roughly $109,000,000 of the revenue decline.

Scott explained the committee used actual results to date, then projected known future events into the original baseline model to produce revised estimates. He emphasized the analysis focuses on public dollars: "We're talking public dollars. Just public dollars," he said when asked whether the model included private or non‑public revenue.

On a net present value (NPV) basis — the committee applied a 10% discount rate for both projects — Scott said the power plant’s original NPV was about $50,000,000, while the revised, no off‑site‑benefits NPV is roughly $7,000,000. He noted timing of when revenues begin and when costs occur heavily affects NPV: delayed revenues and early cost increases reduce present value. "So while this still has a positive net present value, it is certainly not the home run that was originally projected," Scott said.

Council members asked for the underlying computations and for documentation the committee used; Scott offered to provide the detailed worksheets and a breakdown of the changes that produced the revised numbers. Several members urged the council continue quarterly tracking of large projects and to consider stronger contract and project‑management provisions going forward.