POWER PLANT VOTES EXPECTED

Today’s the day when LMU and the City of Logansport are expected to enter into a long-term agreement to buy the community’s electricity from a company called SGP Energy Logansport LLC.

The first phase of the plan, an interim agreement, will allow SGP Energy Logansport LLC to spend the next year testing their plan. LMU Superintendent Paul Hartman said they will burn pellets in combination with coal, but said yesterday that he could not provide information yet about where the pellets are produced. According to the interim agreement, LMU will buy the coal and pellets that will enable SGP to conduct the required testing activities. During the fuel supply period, LMU will buy no less than 80,000 tons of coal from SGP on an annual basis, at a cost of $65 per ton. Also per the interim agreement, an expert evaluation will be conducted within 30 days of the commencement date for the cost-effectiveness of either an overhaul or replacement of each of the 16.5 MW and 22 MW turbines used at the generating plant. Based on the results, LMU and SGP Energy will jointly allocate up to 1.6 million dollars -- per the agreement, LMU will provide the first $400,000 , then LMU and SGP Energy will split the next $800,000 and SGP will provide the final $400,000, if necessary.

According to the Build Operate Transfer Agreement that the city council is expected to approve today, SGP Energy Logansport LLC is to deposit an acquisition and development fee of 1 million, 750 thousand dollars to be held in escrow no later than October 15, to be released to the city when the interim period is over. When the plan was originally announced in April, that fee was due within 30 days.

According to the Power Purchase Agreement, LMU would buy the energy it sells to its customers from SGP Energy Logansport LLC for 7.3 cents per KWH for the first four years of the agreement; then, the energy rate will be adjusted and will not exceed 8.35 cents per KWH for the next 16 years.

Phase I of the project would transition the existing generating plant to use a renewable pellet as its primary fuel; Phase II will deploy a natural gas generation platform to increase capacity and Phase III will construct a new solid fuel facility.

This is the third company the city has formally negotiated with since announcing its affordable energy plan in November 2012. City officials say SG Preston also plans to build a $400 million plant to produce biodiesel in Logansport, and made a $550,000 loan to the company late last year.

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.