LOGANSPORT, Ind. (WLFI) – Logansport city leaders hope the third time proves to be the charm to provide energy to its citizens.
After months of delays, Mayor Ted Franklin (R) announced a deal Wednesday with SG Preston to retrofit the city’s power plant as well as expand energy production, possibly providing Logansport with millions in cash every year.
But the mayor’s opponent, Dave Kitchell (D), in November’s election disagrees.
The deal comes after about three years of work.
“It’s a relief for me,” said Franklin.
It’s a three-phased project to invest in the city’s coal-fired power plant. If not for the public-private partnership, due to regulations from the Environmental Protection Agency, the plant would have to close by January.
Franklin says Phase 1 will retrofit the plant to burn a mix of coal and pelletized fuel, which combine to pollute less than either separately.
“The two of them blend and they cause the two elements to stick together and actually make it easier for it to collect in the filters before it’s emitted into the atmosphere,” said Franklin.
But as News 18 has already reported, twice before, similar agreements with other developers have fallen through.
Franklin says this one is different and is farther along, in part because of the number of engineers associated with SG Preston he’s met, as well as the money.
“I personally have met with the people who will do the financing and that’s farther than we’ve ever been before,” said Franklin. “It’s more than a closed circle this time. It’s actually bringing in those people who have the checkbook.”
Franklin says Phase 2 will add another 90 megawatts of power through a combination of natural gas and steam. Phase 3 would add about 80 megawatts through pellet fuel. In total, it’s a $250-300 million investment, which almost matches the entire assessed value of the city which currently stands at $350 million.
While there’s no guarantee the latter two phases will be built, Franklin says that’s where the money will be recouped by investors.
“Phase 1 is basically a BAND-AID, a prop up that would allow SG Preston to build Phase 2 and 3 where the real money is to be made,” said Franklin.
He says the only way Logansport will not recoup its $1.6 million in consultant fees is if the pelletized blend retrofit doesn’t meet government approval. If it does, the city will bank an extra $150,000. He says SG Preston will have a pair of 30-day windows to test burn so that IDEM can approve the mixture.
As for the utility costs to city costumers, Franklin says the initial rate will be 7.3 cents per kilowatt hour, with a ceiling at 8.35 cents per kWh in 20 years, which is still under the 8.5 cents per kWh customers pay now.
“The cost of electricity 20 years from now will be less than it is today,” said Franklin.
Franklin also says when all three phases are complete, the city could make about $3 million annually just from extra sales to the nation’s power grid. The agreement calls for the city to receive one percent of energy sales to Logansport citizens and three percent for all sales to the grid.
The deal is for 25 years, with an option for SG Preston to renew for another 25 years. Franklin says it’s the best deal available.
“We’ve generated electricity for for 110 years now,” said Franklin. “This will insure that we’re going to be generating electricity at least another 50. So I’m happy to hang my hat on that.”
Franklin says four agreements still need approval from the Utilities Service Board, the city council and the Board of Works: a purchase power agreement, a lease agreement, a build-operate-transfer agreement and an interim agreement to allow SG Preston to test the pellet blend.
Franklin says the series of votes will begin Oct. 13.
Franklin says the city will not collect property taxes on the property because they will own the land. However, they will be able to tax all equipment.
Kitchell, Franklin’s opponent in the November election, tells News 18 he does not believe this deal is best.
In an email, he wrote:
“Unfortunately, the deal the mayor has struck at the 11th hour in his four-year term comes without any assurance that the pellet fuel used will be allowed by the Environmental Protection Agency in five or 10 years or that the city will be compensated for its investment if the pellet fuel is not permitted, just as coal has been phased out by EPA regulations. S.G. Preston has not been transparent about the content of the pellets and the emissions that will be added to the heart of Logansport by increased use of the plant. The kilowatt rate he wants is not the lowest rate available to the Logansport Municipal Utilities ratepayers, and it discounts any future negotiations with Duke Energy which has provided power to Logansport for decades or even entertaining a proposal from the Indiana Municipal Power Agency which operates in five dozen Indiana cities and is associated with the vast majority of Indiana’s public utilities. At a time when Logansport has lost more than 100 full-time, high-paying jobs in the last week at its signature industrial park employer, the mayor should have taken a step back and not held future economic development efforts hostage to a flawed plan. His actions could be detrimental to the Logansport economy for decades.”