Biomass Lease Terminated by Jasper Clean Energy in Indiana

- by Matthew Crane, April 21, 2014. Source: Dubois County Free Press

[[{"type":"media","view_mode":"media_large","fid":"179","attributes":{"alt":"","class":"media-image","style":"width: 366px; height: 325px; margin-left: 10px; margin-right: 10px; float: left;","title":"Photo: Dubois County Free Press"}}]]Dr. Norma Kreilein, her husband, Mike, Alec Kalla and Rock Emmert were all in session during the Jasper Utility Service Board (USB) meeting Monday night — the eve of Earth Day — when it was announced that Jasper Clean Energy would be terminating the lease to create a biomass power plant in Jasper.

John Rudolf, a freelance writer covering a story for Notre Dame Magazine about Dr. Kreilein — a Notre Dame alumni — and her organization’s battle against the City of Jasper for the past two-and-a-half years, sat by himself in the public seating. Rudolf’s pedigree includes the New York Times and Huffington Post, where his stories gravitated towards environmental and political issues.

Now a freelancer, the Massachusetts writer didn’t know — and apparently, neither did the members of Healthy Dubois County in attendance — that night would reveal itself to be the curtain call for the Jasper Clean Energy saga.

Attorney Bill Kaiser, with the firm Bingham Greenbaum Dahl, made the announcement regarding Jasper Clean Energy CEO Jay Catasein’s letter to the city informing them of the pending termination of the biomass conversion lease.

According to the letter, the project is no longer economically viable due to

  • The cost in utilizing the existing steam turbine in the facility
  • The continued decrease in the price of alternative sources such as wind and solar power
  • The abundance of relatively inexpensive natural gas reserves in shale
  • The closing of coal fired power plants in the region being replaced by more efficient power generation stations
  • The limitations on the Jasper Power Plant site including the limit of the electrical transmission line running from the power plant
  • The completion of newer, lower effective-cost and more efficient large-scale biomass/gas power plant projects
  • The lagging regional electric demand driven by lackluster economic recovery
  • The Indiana Utility Regulation Committee pushing greater efficiency and driving down electricity demand

According to the letter, the lease will be terminated June 20. Kaiser stated there could still be discussion between the city and Catasein regarding other alternatives. “There is nothing that requires you to do that,” Kaiser stated. “He certainly has exercised his right under the lease to basically identify he cannot meet the requirements. He still has time to do that, but at this point he has decided economically he is not in the position to obtain a power purchase agreement which would make the project economically feasible.”

SB chairman Wayne Schuetter made it clear he didn’t know of any Hail Mary passes left for the power plant conversion at this point. “Mr. Catasein told us after the settlement that he would review the project and get back to us,” Schuetter said. “Well, now he has gotten back to us.”

Catasein pointed out in his letter that the new gas power plants being brought online are 600 megawatt facilities, while the Jasper Clean Energy would have produced about 75 megawatts of power from the combined gas/miscanthus-fired turbine. According to Catasein, it isn’t economically viable to compete on the same scale with the investment into the conversion of the older power plant and its lower amount of power production. “We are also limited in the amount of power that can run through our connection to the grid,” Kaiser explained.

Alec Kala wore a dust mask and sat next to Rock Emmert, a member of Healthy Dubois County, during the Jasper Utility Service Board meeting Monday evening.

Alec Kala, a member of Healthy Dubois County Inc. from French Lick, maintained that the announcement Monday evening is exactly what he and others in the organization have been telling the city since they learned of the plan in 2009. “It’s a waste of money,” Kala complained.

Healthy Dubois County’s legal battle regarding alleged Open Door Violations by the City of Jasper during lease negotiations was settled in January. The group maintains that the city held discussions with Catasein through a volunteer group to avoid public scrutiny of health concerns being identified by the grassroots organization known as the Concerned Citizens.

“They should have had public commentary in 2009 before this ever went through the secret meetings,” Dr. Kreilein said. “It should have been vetted to the educated members of the community. We, everyone, has been yelling loud and clear. I became involved because I knew the quality of people who were opposing this.”

Kreilein took the helm as the spokesperson for the newly formed Healthy Dubois County, Inc. after the departure of Chris Breedlove. Breedlove, a local preacher, who had formed the concerned citizens group that eventually organized itself under the Healthy Dubois County standard

“Yes, we are happy, this is a win for the women and children of the community,” Rock Emmert said. “At least for now, but they didn’t say the plan was dead.”

The plan isn’t dead according to Chairman Schuetter. “We aren’t taking any steps for sixty days,” he said, referring to Catasein’s timeline, “and then it will be discussed in an electric committee meeting.”

According to Schuetter, with the right plan, biomass is still a viable option for the power plant.

The city has spent over a million dollars on the project between the litigation expenses and lease negotiations. Those costs don’t include the purchase of the Heidorn home adjacent to the power plant property for $315,000.

The city contends that they wouldn’t have the expenses they incurred if they hadn’t relinquished Catasein from the responsibility of making quarterly lease payments due to the litigation by Healthy Dubois County. “The city would have basically been even,” Schuetter explained.

Healthy Dubois County disagrees, saying the city made a voluntary decision to relinquish Catasein of those lease option payments and effectively placing the costs on the city rate payers.

According to the Jasper Utilities Manager Bud Hauersperger, the fees associated with the proposal process, lease negotiations and litigation could be passed on to the rate payers eventually after future rate studies are conducted.

The power plant will not have to be tested for at least a year since it did not opt into the capacity payment market with Midcontinent Independent System Operator, Inc. (MISO). If the city chooses to take capacity payments for the potential power generated through coal at the plant, they will have to apply next year.

“We might go back to putting out request for proposals, looking for sustainable, dedicated bio-fuel crop,” Schuetter said. “Miscanthus is part of that. If someone else out there other than Catasein says, ‘yeah we think that’s a good idea. It’s been used in Europe and we think we can do it here.’ If they come in and discuss it, then we are back to discussing some kind of lease for that.”

The USB maintained that it was transparent and followed the Indiana Open Door Law during the previous lease negotiations. If no other options are brought forward by Catasein such as someone electing to purchase power from Jasper Clean Energy between now and June 20, the USB and Jasper Common Council will likely move forward with seeking other options to rescue the stranded asset.

“In 60 days, we roll up our sleeves and go back to work,” Board member Ken Sendelweck said during the meeting.