April 2, 2014

KITCHELL: Latest LMU move one step forward, two back


---- — The ongoing saga of how Logansport officials will proceed with plans for future energy generation took a new turn last month when it was announced that natural gas generation is now being considered as a future primary source instead of refuse derived fuels — what we call trash.

While this announcement didn’t necessarily represent a 180-degree turn from the city’s fast and furious pursuit of a proposed pyrolysis plant last year, it was a major change of course and finally connected with the recommendation a Kansas City consulting firm produced for Logansport before the pyrolysis debate began over a year ago. Given the availability of natural gas and pipelines already in place in Cass County, the natural gas option would seem to be more viable than transporting an estimated 6,000 tons of trash a day to Logansport for more than two decades to fuel the next generating plant. Environmentally, there are opponents who have concerns about fracking, the process of generating increased natural gas from underground which has produced a methane controversy involving wells. Even if fracking is eventually limited or banned however, natural gas production will likely continue not only in the United States, but in Canada.

While that part of the Logansport Municipal Utilities story represents a step forward, there should be concern about two other parts of this story. One is that if city officials elect to pursue a natural gas generating plant, it will be several years before it will be built. The community could really use an economic boost this year, or at least in the next year. This is becoming problematic because as the latest unemployment statistics for Cass County and Indiana indicated last week, Cass County and the rest of the state as a whole are headed in different directions. Cass County’s unemployment rate was 6.8 percent — up .2 percent. Indiana’s rate fell .3 percent to 6.1 percent. Keep in mind that’s before the closing of Logansport’s Sears store which will put even more local workers in the unemployment line, and before summer seasonal employment traditionally reduces unemployment.

What’s wrong with this picture is that if Logansport officials would switch to the Indiana Municipal Power Agency (IMPA) now, rates for Logansport industrial and commercial customers would likely be lowered substantially. Electric rate cuts could spur more hirings throughout the community and that also could lead to more consumption by people in the workforce who will buy homes and durable goods in the community. With no replacement for Sears on the horizon, questions remain about Logansport’s status as a regional trade center for not only Cass County, but most surrounding counties.

Meanwhile, if city officials approved joining IMPA and restructuring the existing Duke Energy contract through IMPA, Logansport could still move ahead with plans to build a natural gas or alternative fuel plant in the coming years strictly for use as a plant to sell power on the nation’s grid and make capital not only for LMU’s infrastructure needs, but the civil city budget and economic development.

A second concern is that based on comments previously reported in the Pharos-Tribune, it would appear that the only method of financing the project being considered involves private investors who would pocket millions before turning over the plant as part of another proposed build/operate/transfer agreement. This aspect of the “rate stabilization initiative” the city has pursued has probably flown under the radar of public scrutiny. Independent analysis of the best funding option for whatever plant is built should be considered, and priority should be given to what is cheapest for ratepayers, not what’s most advantageous to private investors. After all, private investors usually invest in investor-owned utilities, not municipal utilities that are owned by the public and, by definition, aren’t out to make a buck for anyone, but to save a buck for the average homeowner or business owner.

Too many unanswered questions which consultants can’t answer, including what happens if the Environmental Protection Agency cracks down on emissions from Pyrolyzer plants as it has with coal-fired plants, which affect far more communities that pyrolysis.

If city officials are serious about considering “all comers” when it comes to energy proposals, an open, public discussion involving a proposal from the Indiana Municipal Power Agency should be considered, and should be made available for public scrutiny. Business owners, cost accountants, economic analysts and typical Logansport residents who know how to operate a calculator should be able to see numbers that public officials are seeing and decide for themselves what the next logical step for Logansport’s energy future should be.

We have wasted over a million dollars so far on the pyrolysis proposal the city considered last year, and we may have wasted many jobs in the process. As the debate continues to unfold, we all should be asking our city officials how long we should wait to make a decision that 59 other Indiana communities that have joined IMPA made a long time ago and why all those cities aren’t buying power from Duke Energy or another investor-owned utility.

Dave Kitchell is a columnist for the Pharos-Tribune. He can be reached at