ESCANABA - Though officials are not planning to demolish the city's power plant, council approved a motion to obtain an estimate on the salvage value of the building as negotiations to sell the plant proceed.
During a joint meeting of council and the Electrical Advisory Committee on Wednesday, council gave the go ahead for administration to seek a "detailed engineering cost estimate" of the plant from two separate sources.
City Manager Jim O'Toole explained the estimate on the salvage value of the structure and equipment is a vital figure to have, and is worthy of discussion as the sale of the power plant is negotiated.
City officials are currently negotiating with Recast Energy LLC of Richmond, Va., which is seeking to buy the coal-fueled plant and convert it to burn biomass.
Two other companies have also recently submitted letters of interest to buy the facility, announced O'Toole. Aon, affiliated with the American Wind and Energy Group, is interested in buying the power plant. Escanaba Green Energy LLC wants to purchase the coal-fueled plant to convert it to burn biomass.
Two other parties have verbally expressed interest in the plant, O'Toole added.
Regarding the cost estimate on the salvage value of the plant, EAC member John Anthony stressed the goal remains to sell the facility to continue its operation. For clarification purposes, he said the estimate would help in the negotiation process to keep the plant running; the estimate is not a recommendation to dismantle the building.
O'Toole noted the city charter requires a vote of the people to shut down the plant or tear down the building.
EAC member Gilbert Cheves said the value of the structure itself is necessary to know, especially as the plant continues to be maintained and the possibility of required upgrades in the future.
The city is selling the power plant property because it is less costly to buy energy compared to generating power. Escanaba is currently purchasing power from NextEra. The plant was idled on Jan. 1 but was restarted later that month to accommodate market demands.
According to Electric Superintendent Mike Furmanski, the current electric budget - with the plant selling energy on the power market - results in a yearly loss of nearly $1.7 million. The electric budget with the plant idled results in an annual surplus of about $332,000. If the plant were sold, the city's electric budget would show a surplus of more than $2 million year, Furmanski explained.
In other action, council authorized administration to request bid proposals for an analysis of the city's electric rate structure for the next five years.
O'Toole said the purpose of the rate study is to analyze existing rates and recommend rate changes based on current charges, the electric department budget, and the city's five-year capital improvement budget.
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Jenny Lancour, (906) 786-2021, ext. 143, jlancour@dailypress.net