Logansport City Council terminates costly power plant project

Last Updated on December 20, 2015 by cassnetwork

In a special meeting Friday, Dec. 18, the Logansport City Council voted to revoke the mayor’s authority to negotiate with SGP Energy Logansport LLC and to terminate the request for proposals process pursuant to the public private agreement act.

It’s been just over three years since the project was publicly unveiled by a team of consultants hired by LMU and and the city to find a company that would build Logansport a new electric generating plant that would make cleaner, cheaper electricity and ensure that the 31 employees of LMU’s electric generating plant would keep their jobs.

Since that time, there have also been three proposed solutions.

First, there was Pyrolyzer LLC, recommended by the consultants in January 2013.

In January 2014, the council authorized the mayor to negotiate with other providers.

In late April 2014, Mayor Ted Franklin and LMU Superintendent Paul Hartman announced that a purchase power agreement with a company called “Total Concept Solutions” was ready to head to the Logansport City Council.

On May 15, 2014, Indianapolis attorney Brian Bosma led a presentation at McHale Performing Arts Center for Logansport residents to learn more about the proposed $803 million economic development project, including the financial benefits to the city of Logansport.

On May 27, 2014, Pyrolyzer’s president, Frank Canterbury, spoke to the Utility Service Board. According to minutes from the meeting, he said he had been partners with the TCS group until Nov. 2013 and that the partnership had dissolved but he had secured other funding, and asked the board to reconsider who would build the plant.

Meeting minutes show that the Utility Service Board unanimously approved the purchase power agreement with TCS Logansport Energy Group.

There were two city council meetings in June 2014 and on 5-2 votes, the city council approved the power purchase agreement with TCS Logansport Energy Group LLC, but delayed a vote on the then yet-to-be-released development agreement with the company, asking for 30 days to review it.

There was another public meeting with Brian Bosma at McHale Performing Arts Center in late August 2014 to explain the Development Agreement with the company, now referred to as Logansport Energy Group LLC. Those in attendance were told that the company would be required to pay a $1.75 million franchise and due diligence fee by March 31, 2015. Local businessman Dick Dilling was announced as the local representative for the project.

At two special meetings in September 2014, the council approved the Development Agreement with Logansport Energy Group LLC, with Councilman Chuck LaDow voting against it on the 2nd reading.

In a press release issued March 31, 2015, the mayor announced that an agreement with TCS Logansport Energy Group LLC had not been reached.

At their meeting on April 6, 2015, the Logansport City Council voted to terminate agreements with TCS Logansport Energy Group. Franklin told the council that he planned to make a joint announcement the following day with another group of investors.

In a joint news release issued April 7, 2015, the mayor announced that SGP Energy, an affiliate of S.G. Preston Company, would acquire and operate the Logansport generating plant through its designated affiliate, SGP Energy Logansport LLC.

Per the release, “an Acquisition and Development Fee of $1,750,000 will be placed in an escrow account within 30 days. All negotiations and agreements are expected to be completed by the end of June 2015.”

It would be the second Logansport project announced by S.G. Preston. In December 2014, the Logansport City Council approved a $550,000 forgivable loan for the company’s biodiesel and bio-jet fuel project.

In a Sept. 30, 2015 press release, the mayor said a “three-phased project” with S.G. Preston Company would assure long-term electric generation for Logansport.”

“The Logansport Generating Plant would be leased by SGP Energy Logansport LLC and will be retrofitted to accept renewable fuel pellets with the approval of IDEM and EPA … The second phase will progress to a natural gas component. The final phase will utilize renewable pelletized fuel in a new facility.”

The Council and Utility Service Board held special meetings in October 2015 where they voted to approve agreements with S.G. Preston, but a letter from the company’s attorney posted on the Pharos-Tribune’s website asked that the Board of Works hold off on their vote on October 20.

On October 30, 2015, the City announced that $3 million had been deposited by a company and made available to S.G. Preston and its affiliates, and on December 4, S.G. Preston’s CEO R. Delbert LeTang responded to a letter written by the Indiana Sierra Club.

In an interview on Talk of the Town on WSAL on Tuesday, Dec. 8, Franklin said he expected the deal to wrap up by Dec 31.  A new mayor, Dave Kitchell, and six new members of the Logansport City Council will take office on January 1, 2016.

Kitchell has appointed Jim Brugh, a Logansport attorney who represented Kitchell’s wife, Julie, in a lawsuit against the city and the power plant project, to serve as the attorney for the Utility Service Board. Mercedes Brugh has been appointed the city’s deputy mayor.

According to documents that accompany a Dec. 17 article in the Pharos-Tribune, on Sept. 29, 2015, IDEM received a request from LMU dated Sept. 24 for a one-year extension of the January 31, 2016 compliance date. The request indicates that instead of 100% coal, LMU would burn engineered fuel pellets or a combination of coal and engineered fuel pellets, produced by Greenwood Fuels (GWF) of Green Bay, WI.

On Dec. 4, 2015, Brugh filed a motion to intervene, petition for administrative review and for a stay, on behalf of the Citizens Alliance for Responsible Energy (CARE), which he describes as “a group of Logansport residents and LMU electricity ratepayers who oppose LMU’s incineration plans (to make electricity) for more than two years.”

On December 17, Mayor Franklin’s secretary e-mailed a letter he had written to the Logansport City Council to Cass County Communication Network, Mid-America Radio Group of Logansport and the Pharos-Tribune.

In it, Franklin recommended terminating negotiations with S.G. Preston and revoking the mayor’s authority to negotiate a build-operate-transfer agreement.

“Unfortunately, this transaction is dead,” R. Delbert LeTang said in an e-mail in response to a request for comment on Thursday, Dec. 17. “I will not elaborate with details but will only say that the negative activities by individuals inside and outside of the City sends a very definitive message to businesses looking to do business in Logansport and Cass County that you are not welcomed here. To me, this is a tragic ending to a promising economic development opportunity for a struggling American town, there will be no $300 million investment, no jobs saved or created, and higher cost power, no matter how it is disguised in the short term. Logansport has a very, very difficult road ahead.”

The council held a special meeting at 5 p.m. on Friday, Dec. 18, 2015. The mayor was not in attendance. Council president Joe Buck, who led the meeting in the mayor’s absence, said that Mayor Franklin was on an already-scheduled business trip.

Buck read the mayor’s letter to the council and Councilman Bob Bishop read a statement he had prepared, both citing Brugh’s legal challenges as reasons for terminating the project.

According to Resolution 2015-38, which the Logansport City Council passed unanimously on Dec. 18, 2015, the escrow funds were not deposited by the Oct. 15, 2015 escrow deposit date.

Over the last four years, according to figures obtained from the Clerk-Treasurer’s office, the City of Logansport had spent more than $2.3 million on consultants and legal fees as of March 31, 2015.

Outgoing councilman Chuck LaDow and incoming at-large councilman Terry Doran both addressed the council during Friday night’s meeting.

“They chose to walk away,” Doran said. “Stop blaming other people.”

According to its 2014 annual report, LMU purchased 74.3% of electricity used by its customers from Duke Energy and generated the rest at the generating plant on Race Street.

Per an April 7, 2015 press release from the mayor, “the City of Logansport is currently under contract to purchase its electric supply requirements from Duke Energy through December 31, 2018, and is not required to provide notice of future intent with regard to electric supply requirements until December 31, 2016.”

The Logansport Utility Service Board will meet at 7 p.m. Tuesday, Dec. 22 for their monthly meeting. The agenda includes an update on the power plant project, under the Superintendent’s report. An executive session, which is not open to the public, is set for 6 p.m. and will continue after the meeting if necessary.

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