ESCANABA - The sale of the Escanaba power plant is not taking place today as anticipated because the buyer has not yet closed on its loan with its lender.
The city has been in the process of selling the facility to Escanaba Green Energy (EGE) for more than two years. Following several setbacks, mostly due to delays in EGE's financing, both parties were expecting to close on the deal today.
"The City of Escanaba, through our attorney who is handling the closing on the sale of the power plant, was advised by Escanaba Green Energy that they would not be ready to close on the sale of the Power Plant today," stated City Manager Jim O'Toole this morning.
In the meantime, O'Toole said the city is ready and waiting.
"We are prepared to close as soon as Escanaba Green Energy advises they are ready," he said, adding a new closing date has not been scheduled yet.
EGE President Charles Detiege said this morning the reason the sale was postponed was because of a delay in completing the closing paperwork between EGE and its lender.
"The delay in closing was not associated with the city and EGE side of the transaction. The delay was on the EGE and lender side," said Detiege, explaining they are working out the final documentation to close the loan.
EGE is purchasing the plant, coal inventory, 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.
EGE has been working to secure financing for a $36.5 million loan to buy the coal-fueled facility and convert it to burn biomass.
Escanaba is selling the power plant because it is less costly to buy power from a wholesaler compared to generating energy by burning coal.
The city has been purchasing energy from NextEra of Florida since Jan. 1, 2012. Once the plant is sold, the city will continue to buy 100 percent of its power from a supplier.
A city-wide election on Monday approved a proposal by a vote of 509-229 granting council the authority to dispose of the power plant if necessary.
Sale of the facility is the city's first priority but if the deal falls through and operational funding ceases from the Midwest Independent Transmission System Operator, Inc. (MISO), the city will consider retiring the plant in lieu of increased power rates.
If the city continues to operate the plant without MISO funding, rate hikes would take place. Idling the plant would mean a 12 percent customer rate hike while full operation of the facility would mean a 35 percent rate increase.
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Jenny Lancour, (906) 786-2021, ext. 143, firstname.lastname@example.org