ESCANABA - The company buying the Escanaba power plant has switched to a new investment firm for a $36.5 million loan to purchase the facility and covert it to burn biomass.
During a joint meeting of city council and the Electrical Advisory Committee on Wednesday, Escanaba Green Energy (EGE) President Charles Detiege explained the recent turn of events as the company pursues to close on the property as soon as possible.
EGE has been negotiating with the city to buy the power plant since the spring of 2012. The two parties have agreed on a $1.6 million sale contract but EGE has experienced financing issues that have delayed the final closing.
The company had been working on a $30 million loan deal with Provartis but due to setbacks, including recent international banking issues, EGE sought alternative lending options.
Detiege said EGE is now working with Black Diamond Investments out of New Jersey to secure a $36.5 million loan. Black Diamond is located in the United States, so EGE will not have international regulatory concerns to contend with, he said.
EGE's loan needs were increased from $30 million to $36.5 million, due in part to money lost through negotiations with Provartis and additional costs EGE agreed to pay the city for legal expenses due to the funding delays.
Detiege told council and EAC members that EGE plans to sign with Royal Bank this Friday on a $1 million loan to be used as the down payment on the Black Diamond loan.
Once the $1 million deposit is made with Black Diamond, EGE is hopeful to receive the full loan from this investment firm within 30-45 days, said Detiege. At that point, a date can then be scheduled with the city to close on the sale of the power plant, he said.
"We're going to buy the plant and convert it to biomass and operate it for the next 15 years at a minimal," Detiege said after the meeting, assuring EGE's commitment to seal the deal.
The lending process has taken longer than anticipated, Detiege said, adding, "This project has taught me patience and fortitude."
Looking ahead, council continues to discuss the possibility of a voters' referendum to grant council authority to consider disposing of the power plant if the facility is not sold.
Escanaba is selling the plant because it is less costly to buy power rather than generate its own energy with coal. The facility continues to be available to the regional market and is currently in operation and selling energy on the grid.
The Midwest Independent Transmission System Operator, Inc. (MISO) is paying Escanaba nearly $4 million for the city operating the power plant from June 15, 2012 to June 14, 2013. The city is seeking additional reimbursement from MISO for continuing to make the facility available as a regional power source.
In other business Wednesday, council voted to not participate in a state program which would require the city to collect $1 a month from residential customers to assist low-income customers pay their electric bill.