ESCANABA - Escanaba is crossing its fingers that the sale of the power plant is finalized by the date of yet another extension of the purchase agreement.
During a joint meeting with the Electrical Advisory Committee on Wednesday, council granted Escanaba Green Energy (EGE) an additional 30 days to close the $1.6 million deal by Nov. 8. The company's last deadline to get necessary documents in escrow was Tuesday.
Escanaba and EGE have been negotiating a sale of the coal-fueled plant since this spring. EGE, which plans to convert the plant to burn biomass, has failed to meet several escrow date deadlines due to the company's financial institution not coming through with funding in a timely manner.
Because of the number of delays during the past few months, EGE agreed last month to pay the city's legal costs from a previous deadline of Aug. 31 to the closing sale date.
To date, EGE has paid a $200,000 down payment on the $1.6 million price for the facility and property. The company also plans to pay the city for supplies of coal and diesel fuel existing on the closing date.
EGE expects to invest more than $30 million in the purchase, conversion and modernization of the plant, according to company officials.
EGE's Chief Financial Officer John Ranson told council Wednesday the current holdup on the loan process is due to four factors. EGE and its lending institution are finalizing various insurance coverage, title insurance, procedures for bank funding during the conversion period, and loan documentation, he said.
In a letter sent to the city this week, EGE President Charles Detiege stated a 30-day extension to Nov. 8 will give the company and its lender "sufficient time to complete the documentation of the financing and effectively handle all the details that are associated with such a financial closing."
Detiege added, "EGE remains committed to this purchase transaction and the conversion of the (power plant) to burn biomass." He also expressed his appreciation for the city's support during the negotiation process.
Once the plant is converted, EGE expects to employ about 25 high-skilled workers with a spin-off of 75-100 skilled jobs in the wood harvesting and transportation sectors, Detiege stated.
Ranson informed council that after the purchase agreement is finalized, EGE will commence a $12 million contract for site preparation work to enable construction to begin in the spring.
A six-month construction period is anticipated to convert the plant to burn biomass, he said. Meanwhile, the company will stockpile biomass on the property to burn once the conversion is completed, Ranson said.
EGE recently received approval for two required permits from the Federal Energy Regulatory Commission. The Midwest Independent Transmission System Operator (MISO) has also registered EGE to operate the plant.
In a related matter Wednesday, Escanaba's Electric Superintendent Mike Furmanski announced the city's request for MISO to pay operating costs, dating back to June 15, has been filed and is awaiting a public comment period.
Earlier this year, when the city requested to temporarily shut down the plant, MISO said the facility needs to be ready for operation in the event the regional market needs power from Escanaba. As a result of that decision, MISO would have to pay operational costs which could amount to $3.7 million a year in addition to paying for power generated by the plant, regardless of who owns it, explained Furmanski.
For years, Escanaba has been trying to sell the power plant because it is less costly for the city to purchase energy from a supplier compared to generating its own electricity.