Logansport is now pursuing a solution to its energy needs by altering its existing coal-fired power plant to run on renewable fuel.
The announcement followed unsuccessful negotiations over a new power plant that aimed to align with future federal emissions regulations.
Philadelphia-based SG Preston Co. will be working with the city on the project. Its plan is to retrofit Logansport Municipal Utilities' coal-fired power plant on Race Street to run on a "clean burning renewable pelletized fuel," according to a press release.
R. Delbert LeTang, founder, chairman and CEO of SG Preston, said he does not yet have permission from the company that makes the pellets to disclose what they're made up of. He maintained, however, that the fuel is "a 100-percent renewable material" used in commercial coal-fired power plants in the U.S.
"This is not experimental," he said. "This is something that's been proven in the marketplace."
The project would eventually undergo a second phase that would increase that plant's capacity to 120 megawatts, according to the press release. Both phases are expected to cost a total of $120 million.
LMU's average customer demand consists of about 65 megawatts. The extra power generated by the retrofitted plant would be made available for sale. Logansport Mayor Ted Franklin said the city would benefit from those sales in a manner to be determined in future negotiations.
The city issued a request for proposals in 2012 seeking the development of a new power plant that would generate electricity for LMU customers at no more than 5.5 cents per kilowatt hour. Franklin said he is doubtful that rate could be achieved with SG Preston Co.'s idea, but is confident the rate will be competitive.
While the pellets would initially be transported to the plant, LeTang said the goal would be to eventually develop a manufacturing facility for them in town as well.
The press release goes on to state SGP Energy, a subsidiary of SG Preston Co., would acquire and operate the facility through its designated affiliate, SGP Energy Logansport LLC.
The public-private partnership between the company and the city would require the development to be privately funded, the press release continues. SGP Energy Logansport would lease the property from the city on a long-term basis, retain LMU's employees and create new jobs.
Franklin said he and the company are currently working on a letter of intent that will precede the negotiations.
About $1.6 million the city spent on consulting fees has been a source of contention since officials started pursuing energy solutions about two years ago. The most recent developer the city had been working with couldn't come through on an offer of $1.75 million to reimburse those costs.
Franklin said SGP Energy Logansport is expected to place a $1.75 million acquisition and development fee in an escrow account within 30 days of signing the letter of intent.
All negotiations are expected to be completed by the end of June 2015, according to the press release. Public meetings attended by LeTang will follow before final consideration by the Logansport Utility Service Board and City Council.
The coal-fired operations at LMU's plant are scheduled to be retired in 2015. The city is under contract to purchase additional electric supply requirements from Plainfield-based Duke Energy through December 2018.