ESCANABA - The sale of the Escanaba power plant is coming closer to reality as funding is committed and one of two required regulatory permits is approved, according to the city manager.
The city of Escanaba is working with Escanaba Green Energy (EGE) to close a deal on the power plant for $1.6 million. The sale has been delayed several times this year due to EGE's financial institution not coming through with funding in a timely manner.
Escanaba City Manager Jim O'Toole said the city received a letter of commitment from EGE's lender last week, which means the bank is backing up the company to buy the power plant.
"The letter of commitment means a financial institution has committed funds to the project in not only buying but in making the retrofit to biomass," said O'Toole. EGE plans to purchase the coal-fueled facility and convert it to burn biomass.
In addition, O'Toole noted EGE received approval last week on one of two permits needed from the Federal Energy Regulatory Commission, also known as FERC. The regulatory agency approved EGE running the plant as a market-based operation, he said.
Approval of a second FERC permit, which EGE expects any day, is needed to finalize EGE's purchase of the power plant, O'Toole said. Council's most recent deadline for EGE to enter all required documents into escrow is Oct. 9.
Because of the number of delays during the past few months, EGE agreed earlier this month to pay all of the city's legal costs from the previous deadline of Aug. 31 to the closing date of the sale.
Due to EGE's failure to meet a July 31 deadline, the city upped the selling price from $1.5 million to $1.6 million. Both parties agreed on and signed the terms of the purchase agreement in July.
Escanaba is selling the power plant because it costs less for the city to buy power off the market compared to generating power.