News & Events

April 07, 2015

Logansport hopes 3rd time is the charm for power plant developer

LOGANSPORT, Ind. (WLFI) – For the third time, Logansport city leaders announce their intent to work with a developer to provide power to the city into the future. The news comes one day after the city council voted to end negotiations with another developer.

For a number of reasons — size, money and location, the latest proposal is very different.

For the first time, plans call for Logansport’s current power plant to be given new life. While new federal Environmental Protection Agency rules mean the coal-fired technology must close in less than a year, an announcement Tuesday may keep it going long into the future.

“We’ve always know that this was waiting in the wings if one of the other projects didn’t come to fruition,” said Logansport Mayor Ted Franklin.

The city announced its intent to enter into a partnership with SG Preston to retrofit the plant to burn a renewable fuel pellet and increase energy production from 38 to 120 megawatts. That’s almost twice the average amount that the city needs, which Franklin says is about 65 megawatts.

SG Preston is the same bioenergy firm that in December announced plans to build a $400 million bio-fuel production and processing facility. The developer being a known entity is a comfort to Franklin, especially compared to the secrecy surrounding the previous proposed developers.

“They’ve already met with city council and Utility Service Board members and were very eager to pass out their contact information,” said Franklin.

Franklin says other negotiated proposals which promised new construction, lower energy rates and much more power, would have been far more lucrative for the city. Pyrolyzer’s plans called for up to 300 megawatts of power. Logansport Energy Group LLC plans called for up to 2,000 megawatts. The city would have gotten a percentage of the proceeds that the developer would have sold to the grid.

But each of those previous plans have fallen through.

“We see an opportunity that fits well within our model to deliver something that is tangible,” said SG Preston CEO R. Delbert LeTang. “We’re not making pie in the sky promises and all new technology.”

While LeTang tells News 18 the company is in negotiations to acquire three similar power plants on the east coast, currently they don’t operate any.

That information led councilman Chuck LaDow to say Monday night, “I’m still not sold. I’m still not sure just because of the inexperience and the background of who we’re dealing with.”

As a measure of good faith, SG Preston will be putting $1.75 million for an acquisition and development fee into an escrow account within 30 days. All negotiations are expected to be complete by the end of June.

LeTang says he wants to be present for questions during all public meetings.

“If I need to bring the pellets to the meetings, I will,” said LeTang. “But you can touch the pellets. You can burn the pellets. You can touch the plant. You can burn the pellets in the plant. What’s left in the equation?”

Franklin says that it’s too early to estimate what the electric rate would be if all things come together. While he said it wouldn’t be as low as Logansport Energy Group’s promised 5.3 cent rate, it would be cheaper than the city’s current rate.

But despite his words and faith Tuesday, Franklin acknowledges he cannot guarantee that SG Preston will be any more successful than the announcements which have failed in the past.

Several documents need to be drawn up between the city and SG Preston, including a Public Private Partnership, a Purchase Power Agreement and a Build Operate Transfer Agreement.

The plant will continue to employ all existing Logansport Municipal Utility employees and should create new jobs as well.

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