July 22, 2013

DAVIS: Shed some light on the situation

By John R. Davis
Guest columnist

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Tuesday, July 23, will mark my last meeting as a member of the Logansport Municipal Utility Service Board. I believe it is appropriate that as I close this chapter of my public life, I offer some reflections on the historical nature of our utility, the future of our municipal utility and some closing personal thoughts on public service.

Logansport is a unique animal. We still generate our own power and control the operation of both our generation and distribution of that power. In addition, we operate a water department and a wastewater department. Further, the Stormwater Management Board has responsibility for stormwater drainage.

From a historical perspective, I returned to Logansport from college in 1973 and went to work for the Logansport Pharos-Tribune. I covered the Logansport Board of Public Works and Safety and Dan Blom covered the Logansport City Council. You might say we had front-row seats as we observed and reported on the operational and financial problems that befell the Logansport Municipal Utilities (LMU) in the mid-1970s, ultimately ending in the passage of city ordinance 78-13 creating the service board.

Through hard work of many individuals, the utility's situation stabilized, and in general, LMU enjoyed stable, competitive and profitable years through the 1980s and 1990s. The tides began to change in the new millennium, specifically when our coal prices shot from approximately $65 per ton to $136 per ton. As a utility we began losing money in 2009 and have bled red ink ever since. Over the four-year period of 2009 to 2012, we lost approximately $4.5 million.

This leads to the second issue I wish to address, the current discussion of a new electric generation plant, commonly referred to as the Pyrolyzer proposal. Again, it is mandatory that one understands how we got here, thus let me offer a brief history.

We, as a board, received requests for proposals for an electric system master plan. Once they had been received, we assembled our own team of consultants to review the proposals, and ultimately, we selected Lutz, Daily and Brain Consulting Engineers. The Lutz, Daily and Brain report offered four options, however, a financial review by financial consultants Crowe Horwath, subsequently, indicated that the cost of such a project to the utility and its rate payers was prohibitive.

We then received requests for proposals for an "electric generating plant repowering and expansion project." Of those received, our consultants recommended the Pyrolyzer proposal and the utility board and city council approved the city entering into a memorandum of understanding with Pyrolyzer. Negotiations have been ongoing with a target date of October for a Build Operate Transfer Agreement (BOT) and a Purchase Power Agreement (PPA).

Those who have attended USB meetings know that I have previously requested that we also investigate alternatives while we await the Pyrolyzer negotiations. Specifically, I asked that we investigate the membership in the Indiana Municipal Power Association (IMPA) or Midwest Independent Transmission System Operator (MISO). I believe we must also continue open communication with Duke Energy, our current supplier of purchased power, and that we should also approach Wabash Valley about the potential for purchasing power. Our attorneys have currently indicated that we cannot pursue such discussions until the Pyrolyzer proposal is either terminated or successfully negotiated.

If the negotiations are terminated we will be forced to go in another direction, probably one of those previously discussed. If they are successfully negotiated — and the process is followed that we were assured would be followed — the public should have a number of opportunities to voice its support, questions or concerns. The BOT and PPA documents should come first to the Utility Service Board, then the Logansport City Council and finally, the Logansport Board of Public Works and Safety. I believe the public interest that we have seen in this project has been a positive force and that public input should continue through the review of these agreements.

In closing, I would be remiss if I did not offer my thanks to the Logansport City Council for its appointment from 1995 to 1999 and Mayor Michael Fincher and Mayor Ted Franklin for the current mayoral appointment from 2005 to 2013. I also wish to thank previous utility superintendent Klaus Hemberger and current superintendent Paul Hartman for their leadership and all the board members with whom I've had the privilege to serve. Finally, thank you to the employees of LMU who work tireless every day to make our city a better place to live and to the public for trusting me with this responsibility. I am forever grateful and humbled by that trust.

John R. Davis is a Logansport resident and a member of the Logansport Municipal Utility Service Board.