ESCANABA - The company buying the Escanaba power plant continues to work on its financing to close the deal despite several delays, according to Escanaba City Manager Jim O'Toole. He provided an update on the sale at Thursday's Escanaba City Council meeting.
For the past year, Escanaba Green Energy has been negotiating an agreement with the city to buy the coal-fueled power plant. EGE is in the process of securing $30 million to pay $1.6 million for the facility and use the remaining funds to convert the plant to burn biomass.
Last month, the city was informed a financier for EGE, representing 10 percent of the project's funding, backed out. EGE is in the process of securing the lost funding, said O'Toole.
"They are continuing to work on their financing and will keep us updated," O'Toole told council.
Because of the delay in financing, the city has postponed EGE's closing date several times. In exchange, EGE agreed to pay $100,000 more for the plant (originally offered at $1.5 million) and also agreed to pay the city's legal fees incurred because of the delays.
Recently, EGE made a $10,000 payment on those legal fees and also offered the city $100,000 worth of capacity credits after the sale is finalized, explained O'Toole. The city would have had to purchase the credits from EGE after it takes ownership of the plant.
In a 3-2 vote Thursday, a motion was passed for the city's administration to request a three-year business plan from EGE.
Voting in favor of the motion were Pete Baker, Ron Beauchamp and Pat Baribeau. Votes opposing the motion were cast by Mayor Leo Evans and Mayor Pro Tem Brady Nelson.
Prior to the vote, Baker said, "I hope the sale closes soon and the purchaser is successful."
Baker and Beauchamp said they would like a business plan to show the future security of the jobs there. Baribeau said she wants a business plan because council's sale closing deadline was not supported.
Nelson said selling the power plant to EGE is a good deal for Escanaba despite the unmet deadlines. It's a benefit to the city for the facility to continue operating and the 22 workers there to keep their jobs.
A $30 million project can be a very complex and time-consuming process to finalize, added Nelson, who does not want to see the facility shut down.
"I'm not giving up on this power plant," he said.
Escanaba is selling the power plant because it is less costly for the city to purchase energy from a supplier compared to generating its own electricity by burning coal.