ESCANABA - Voters in Escanaba will be asked to decide Tuesday whether or not to allow council the authority to dispose of the city's power plant. Polls are open from 7 a.m. to 8 p.m.
The ballot question is a contingency plan in the event the present sale of the facility does not take place and operational monies to run the facility are no longer funded by a third party.
Escanaba Green Energy (EGE) has been negotiating with the city for more than two years to buy the coal-fueled power plant to convert it to burn biomass. The deal is nearing closure as EGE completes the final stages of securing a $36.5 million loan needed to buy the plant and pay for the biomass conversion.
EGE is purchasing the facility and 17 acres of land for $4.4 million which includes $2 million the city will retain if the company decides to back out of the deal after the sale.
During council's regular meeting on Thursday, EGE President Charles Detiege said EGE was trying to close the loan deal with its lender this coming Monday but that has been postponed to Friday.
City Manager Jim O'Toole said Thursday the city is finishing up the closing documents to be ready for the sales transaction.
Until the sale is finalized, Escanaba will continue to purchase 100 percent of its energy from NextEra, a Florida company which has been supplying power to the city since Jan. 1, 2012.
Tuesday's vote, either approved or not approved, will not affect the pending sale of the power plant to EGE which will continue to close the deal after the election, Detiege has said in the past.
Mayor Marc Tall said Thursday the sale remains the number one priority for the city. But if the sale does not go through and operational funding stops, Tall said the city will have a "tough decision" to make if the plant cannot be shut down.
If the power plant sale does not go through and voter approval is granted for council to dispose of the plant, operations would continue as long as operational costs are being paid for by the Midwest Independent Transmission System Operator, Inc. (MISO), a regional interconnection agency. The plant and property would also continue to be up for sale.
No rate increases are slated for electric customers as long as MISO continues to pay the city $125,000 a month to keep the facility operational and available to the power market, stated Electric Superintendent Mike Furmanski at a previous meeting.
The MISO funding is expected to possibly last until the summer of 2016 but the agency could terminate its agreement with a 90-day notice at any time, he noted.
If the plant sale does not take place and if MISO stops reimbursing the city to keep the plant operational and available on the power grid, the city would have to make a choice, Furmanski said.
The plant could be idled with a reduced staff and a 12 percent rate increase for customers. No voter approval would be needed but MISO would have to approve to idle the plant.
If the plant is operated with a full staff at a cost to the city of $375,000 a month, customers could see a 35 percent rate increase, said Furmanski. In this scenario, no vote and no MISO approval would be needed.
If the plant is retired, there would be zero costs for staff or operations. Tuesday's referendum vote is needed to retire the plant and MISO approval is also required. The city would continue to buy energy from a power supplier.
Without voter approval to allow council to retire the plant, the city would have to wait as MISO decides to consider the plant's retirement, costing the city an estimated $125,000 a month, Furmanski said.
O'Toole said last month the city has the authority to continue plant operations but does not have the authority to tear it down without voter approval.
"We feel we need to have the authority to dispose of the power plant should the (EGE) deal not transpire," said O'Toole. "We want to respond immediately."
Escanaba is selling the plant because it is less expensive for the city to purchase power compared to generating electricity by burning coal.
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Jenny Lancour, (906) 786-2021, ext. 143, firstname.lastname@example.org