Escanaba to get reimbursed for plant operations

ESCANABA – Escanaba received some very good news this week that a regulatory agency will pay the city for keeping the power plant operating since last summer.

Council was informed during its regular meeting Thursday that the Midwest Independent Transmission System Operator, Inc. (MISO) will pay $3.7 million from June 15, 2012 to June 14, 2013 for continuing to operate the power plant as a regional power source.

City Manager Jim O’Toole made the announcement while updating council on the power plant, saying, “This is very good news for the city of Escanaba.”

MISO is a regional interconnection agency that regulates power sales and buys energy from suppliers, like Escanaba, and sells it on the power market.

Escanaba had asked MISO to allow the power plant to be shut down temporarily because the city was purchasing electricity from a power supplier as a cost-savings measure.

In May, MISO denied the request to idle the plant. In refusing the request, MISO was required to pay expenses to keep the plant operating as a regional power source.

Following a lengthy review process which included criticisms from the stakeholders who will be assessed the costs, the Federal Energy Regulatory Commission (FERC) approved MISO’s request, explained O’Toole.

Once the monies are received from MISO, they will be placed in the city’s electric fund to offset the deficit loss of the power plant, O’Toole said.

Escanaba will be reimbursed for costs to operate the plant from June 15, 2012 up to the time it owns the plant to June 14 of this year. The plant is in the process of being sold to Escanaba Green Energy (EGE).

If the facility is sold prior to June 14 – which is the end of the year-long period MISO is paying for the plant’s operation – payment of operating expenses will be transferrable to the new owner.

O’Toole noted that this is the first time MISO has submitted such a request and received approval from FERC. The city administration was informed of FERC’s approval of the System Support Resource agreement on Tuesday.

Mayor Pro Tem Brady Nelson expressed his gratitude for the city administrators who have been working on the process for MISO to reimburse the city and pay for operating expenses for the year-long period.

Escanaba submitted the shutdown request in December 2011, asking MISO for permission to idle the plant for 36 months with generation available within a month’s notice. The city wanted to idle the facility because it’s less expensive to buy power compared to burning coal to generate electricity.

Since Jan. 1, 2012, the city has been buying energy from NextEra, an energy supplier from Juno Beach, Fla.

For the past year, the city has been negotiating a sale agreement with EGE which plans to buy the coal-fueled plant to convert it to burn biomass. EGE has agreed to purchase the facility for $1.6 million.

EGE is in the process of acquiring $30 million from investors to pay for the plant and cover the costs to convert it into a biomass-fueled facility.

O’Toole informed council Thursday that company officials said EGE is close to reaching a final financial agreement with its partners. EGE is expected to announce a sale closing date with the city at council’s joint meeting with the Electric Advisory Committee on Wednesday.