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March 5, 2013

Logansport to negotiate with Pyrolyzer

City council votes to enter into memorandum of understanding with energy company

In its second vote on the matter, Logansport City Council has opted in favor of engaging in negotiations with Pyrolyzer LLC to develop a new Logansport Municipal Utilities power plant.

Florida-based Pyrolyzer LLC has proposed to build the plant, which would be powered by refuse-derived fuel, without financial contribution from the city for around $450 million. Its proposal states the plant would generate electricity at an initial rate of no more than 5.5 cents per kilowatt-hour.

Logansport Municipal Utilities, or LMU, currently gets about 70 percent of its electricity from Duke Energy at a fluctuating rate of around 5.5 to 6.5 cents per kilowatt-hour. LMU and city officials say the motivation behind building a new plant comes from the impending multi-million dollar upgrades that would be necessary in order to continue buying from Duke or wholesale and future fees that will be imposed on coal-powered plants by the Environmental Protection Agency.

Citizens spoke out against and in favor of Pyrolyzer’s proposal at the council meeting Monday.

Jim Brugh, a local attorney, reiterated claims he made at a council meeting last month that the city had not yet adopted a state statute regulating a public-private agreement, which is what the city and Pyrolyzer will likely engage in should both parties come to terms in future negotiations. The council voted in favor of adopting the statute at Monday’s meeting.

John Molitor, an attorney working as special counsel for the city, said the city took the concern into consideration and decided to vote on it at the meeting.

“The issue was raised whether we needed to formulate that statute and we figured just to be safe, we should do it now,” Molitor said.

Brugh also requested that the council look further into two reports the city and LMU are using to address its energy needs. Last November, financial consulting firm Crowe Horwath prepared an economic assessment of LMU’s energy needs based on a report prepared by engineering consulting firm Lutz, Daily & Brain, LLC.

One of the alternatives the studies address is to perform the necessary upgrades on LMU’s system to keep buying energy from Duke. The engineering report prepared by Lutz, Daily & Brain states this upgrade would cost $14.25 million, while the financial report prepared by Crowe Horwath adds costs with little explanation to come up with a total of about $38.7 million.

“There’s no correlation between the two studies,” Brugh said.

Greg Wengert, a Logansport citizen, spoke in favor of the initiative during the public comments portion of the meeting. Wengert praised Pyrolyzer’s proposal for what he feels will bring jobs to the community and decrease the amount of trash in the landfill. He also dismissed suggestions that Logansport should join the Indiana Municipal Power Agency, or IMPA, saying that just because many communities in Indiana are members doesn’t mean it’s right for Logansport.

“Logansport should not aspire to be the same as everybody else, but to be better,” Wengert said. “Joining IMPA would likely only bring one job to town — the driver of the Brinks truck taking our money to some other community.”

Councilmen Chuck LaDow and Jeremy Ashcraft voted against the measure.

LMU voted in favor of the city entering into a memorandum of understanding, or a show of good faith toward negotiating in the future, with Pyrolyzer in January.

Todd Miller, a Logansport Utility Service Board member, said while LMU and the city have agreed to move forward with Pyrolyzer, the idea of Logansport getting a new power plant is far from set in stone.

“There are so many hurdles to jump through yet in these decisions,” Miller said, referring to the negotiations and permitting that will need to take place before anything becomes permanent.

Several council members have expressed similar sentiments, emphasizing the importance of receiving input from LMU as negotiations move forward.

“I will not vote for this if the Utility Service Board recommends against it,” Councilwoman Teresa Popejoy said.

The Utility Service Board is also planning to explore other alternatives besides a new plant, including continuing buying from Duke or buying electricity wholesale as a part of member-operated organizations like IMPA or the Wabash Valley Power Association.

“If Pyrolyzer doesn’t pan out, we can get a mixture of different suppliers,” Miller said. “Maybe renewables, gas, coal, that’s where an organization like IMPA works.

While these alternatives would likely require expensive upgrades to LMU’s system, Superintendent Paul Hartman said LMU is currently exploring ways to put off certain costs by determining which upgrades would be necessary right away and which ones could be done later.

In other news, the council:

* Approved amending the Logansport and Fringe Zoning Ordinance for temporary housing. City officials say the amendment was proposed to prepare for the large number of construction jobs the power plant project is expected to bring in, if and when it begins.

* Approved to correct an oversight that caused trash collection fees to remain at $12.30 per month in 2013 rather than the originally approved $10 per month. Future trash collection bills will set fees at $10 per month and refund the extra $2.30 per month customers have wrongly been charged since January.

Mitchell Kirk is a staff reporter at the Pharos-Tribune. He can be reached at 574-732-5130 or mitchell.kirk@pharostribune.com.

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