ESCANABA - Despite another delay, Escanaba Green Energy continues to be very interested and is working hard to purchase Escanaba's power plant, the company president assured council at its meeting Thursday.
Council granted the local company another extension Thursday to come up with funding to purchase the facility. Negotiations have been taking place for the past five months between the two parties, which agreed on and signed the terms of the sale contract last month.
Because of EGE's failure to meet theJuly 31 deadline, the city upped the selling price from $1.5 million to $1.6 million. The company has paid a $200,000 down payment which will either go toward the selling price or the city will keep if the sale falls through.
EGE President Charles Detiege told council Thursday the company is working to purchase the power plant but the loan process is taking longer than expected with its bank.
Detiege said EGE's bank has approved the company's loan; company representatives received the terms of the agreement Wednesday night and expect to sign the paperwork today. Funding is anticipated within two weeks from the signing, he said.
After the meeting, Detiege explained to the Daily Press that EGE agreed to pay the additional $100,000 on the selling price because it is the company's fault for the delay caused by the slower-than-anticipated funding.
"This is the first time I've ever bought a power plant," Detiege said. He added the company wants to close the deal because it's "still very interested" in buying the plant.
Council's extension on Thursday granted EGE until Aug. 31 to come up with the monies to buy the property. This was the fourth extension council has given EGE within the past two months.
Council approved Thursday's extension in a 4-1 vote with council member Pete Baker casting the lone no vote.
Prior to the vote, City Attorney Ralph "B.K." Peterson explained to council that the Aug. 31 extension was the recommendation of the city's negotiating team.
Because EGE needed more time to solidify its $2 million bond and more time to raise the remaining balance of $1.3 million, Peterson said the negotiating team decided that EGE had violated the terms of the asset purchase agreement.
"We could have pulled the plug but we decided to try to preserve this transaction," Peterson added, noting later "no one else is knocking on the door to buy the plant."
The attorney told council, "We decided we wanted the $200,000 now and decided there was a violation of the asset purchase agreement."
Because of the violation, the negotiating team recommended upping the selling price by $100,000 while also extending the date of the delivery of the escrow documents to Aug. 31, he said.
Peterson said these amended terms are not expected to delay the anticipated closing date of Sept. 30. The governmental regulatory agencies may be what holds up the process, he noted.
Though the sale of the plant to EGE will continue to be pursued, Peterson said Escanaba will also continue to work with Midwest Independent Transmission System Operator, Inc. to temporarily shut down the facility.
MISO is an interconnection agency which regulates utility sales and buys energy from suppliers, like Escanaba, and sells it on the power market. Because of the need to keep the local plant on the market as a regional power source, MISO will not allow the city to idle operations.
By refusing to grant the city's request to temporarily shut down, MISO must pay expenses to keep the plant in operable status whether the city or EGE owns the plant.
If the sale of the power plant to EGE falls through, the city may look to the voters to close the plant permanently, Peterson told council. The soonest the issue could be on a ballot is February 2013, he said.
During Thursday's meeting, a motion was made to wait on considering the extension for EGE until the Electrical Advisory Committee meets at 6 p.m. Wednesday. The motion failed 2-3.
Council members Baker and Ron Beauchamp voted to wait for the EAC's input. Not in favor of waiting until next week to make a decision were Mayor Leo Evans and council members Pat Baribeau and Brady Nelson.
Baribeau noted there are EAC members on the negotiating team which recommended the extension.
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Jenny Lancour, (906) 786-2021, ext. 143, email@example.com