A Logansport businessman was announced as the local representative for the developer of a power plant proposed for the city at a public information session regarding the project’s development agreement Monday.
Logansport Energy Group LLC is backed by France-based Total Concept Solutions, SARL, often referred to as TCS. The company is proposing to privately fund the development of a power plant in the city, the first phase of which is expected to consist of 300 to 500 megawatts and cost about $803 million.
Of those megawatts, 150 would be reserved for Logansport Municipal Utilities customers, about double the average they require. The additional power generated by the plant would be sold through an agreement with the Midcontinent Independent System Operator Inc, or MISO.
It would run on natural gas and possibly refuse-derived fuel in the future.
The city will have the opportunity to own or sell the portion of the plant developed through the first phase in 2044, 25 years after the commercial operation date. TCS will retain the remainder of however large it ends up expanding the plant, which could be up to 2,000 megawatts at a total cost of $3.2 billion.
Brian Bosma, a partner with Indianapolis-based Kroger Gardis & Regas LLP, has been hired by the city to provide special counsel on the project. At a public information session on the recently completed development agreement Monday night, he stressed the city is not required to take on that part of the plant.
“Can we predict this will be a valuable asset 25 years from now?” Bosma said. “No.”
He went on to describe the development agreement as a supplement to the project’s power purchase agreement, which sets an initial rate of 5.3 cents per kilowatt-hour until 2021, when rates would rise in accordance with the Consumer Price Index — All Urban Consumers.
The power purchase agreement has already been approved by the Logansport Utility Service Board and Logansport City Council.
Bosma explained that the intended warranty and bonding provisions in favor of the city were eliminated from the development agreement.
He called these provisions “vestiges of when the city was purchasing the facility,” referring to when the city was working with a different company and the project included a build-operate-transfer agreement.
Because the plant is no longer being constructed for the city but rather to serve it and because the facility lender will likely require bonding, Bosma said Logansport Energy Group insisted on eliminating these provisions.
“It really was a deal-breaker for the developer,” Bosma said.
However, the project’s development plan will require schedules of bonds to be disclosed to the city with monthly updates.
City council will vote on the development agreement on first reading at 5 p.m. Sept. 11 and on second reading Sept. 17 in the City Council Chambers on the third floor of the City Building, 601 E. Broadway. The utility service board is scheduled to vote on the development agreement Sept. 15.
Should both agreements be adopted, Bosma said it is then up to Logansport Energy Group to coordinate its financing. He added he wouldn’t consider the project a go until the city receives a $1.75-million franchise and due-diligence fee meant to compensate the project’s consulting costs.
The power purchase agreement and development agreement would become effective upon approval from the Logansport Board of Public Works and Safety, but would remain subject to the receipt of the fee, which must be submitted by the developer no later than March 31, 2015.
Dick Dilling, president of Logansport-based Dilling Group Inc., was selected by Logansport Energy Group to represent the firm locally.
At the information session Monday, Dilling called himself “a conduit for things moving forward.”
He said Dilling Group will eventually handle preliminary engineering for the project and that he and the firm has a long history with similar jobs across the country.
“I’ve been involved with PPAs for the last 20 years, both good and bad,” he said.
Dilling added he sees himself as wearing “both hats” in the matter.
“I pay taxes, I got a lot of employees, I got a lot of different things going so I’m all for getting more power in Logansport,” he said.
He went on to commend the 4-percent deal the city got on the proposed plant’s gross sales, calling such arrangements “few and far between.”
Tony Campbell, a Logansport citizen, opened the comments portion of the session by referring to the power purchase agreement for the project. The document names a Vivian Kaeufling followed by an address in Strasbourg, France, as the contract representative for Logansport Energy Group.
Campbell said his research on the internet led him to a firm Kaeufling works for. The Pharos-Tribune is attempting to reach the company Campbell’s research named.
Krista Slusser challenged the accuracy of Campbell’s research in her comments and commended Franklin’s efforts on the project.
“Thank you for all the work you’ve done for this community,” she said.
Mercedes Brugh emphasized the importance of LMU’s service area.
“That is a monopoly on the electric customers,” she said. “That’s the most valuable asset LMU has. We’re being asked to hand that over to somebody that we don’t know. We don’t know what the plans are going to look like, we don’t even know how it’s going to run. It’s a blank check.”