Logansport city and utilities officials are split on whether developing a solar field would be worthwhile after a financial adviser prepared several scenarios for the endeavor.
Leaders have been considering a solar field for about a 12-acre property the city owns at 1 General St. where Trelleborg Automotive USA Inc.’s plant once stood.
Eric Walsh, a partner with H.J. Umbaugh & Associates and the city’s financial adviser, went over several scenarios for funding the field at a public meeting Thursday night.
One of those scenarios entailed Logansport Municipal Utilities funding the $3.4 million project with cash on hand.
For that and all of the scenarios, Walsh applied estimates on the effects degradation of the solar panels would result in along with estimated annual maintenance costs.
LMU entered into an agreement with NextEra Energy Resources Power Marketing in 2016 to provide LMU’s power Jan. 1, 2019 through May 31, 2024. The agreement allows LMU to generate up to 10 percent of its own power as long as it’s from a renewable source.
Generating its own power from a 2-megawatt solar field would decrease the amount LMU would have to purchase from NextEra Energy Power Marketing. Were LMU to fund the field with cash on hand, Walsh said it would break even around 14 to 15 years later. If the solar field lasted for 25 years, Walsh said the scenario would result in about $2.7 million in savings.
LMU could also fund the project through a bond issue, Walsh said. While it wouldn’t require $3.4 million up front like the first scenario, the possibility involves LMU paying off the debt at about a 4-percent interest rate over 25 years. He said LMU’s current electric rates would support the debt payments, meaning a rate hike would not be necessary.
Walsh applied LMU’s current electric rate of 6.9 cents per kilowatt- hour to all of the scenarios. Officials have said LMU’s electric rates will go down after switching to NextEra Energy Power Marketing from its current provider, Duke Energy, but the specifics of that change remain confidential. When rates do go down, Walsh said savings from the solar field would go down as well, pushing the breakeven point back farther.
Under the scenario, Walsh said LMU would save about $366,000 over 25 years.
Settling a bond issue in 20 years would result in a lower interest rate and five years of the solar field creating savings without having to make debt payments. LMU would save about $1 million over the estimated life of the project, Walsh said.
Applying for money from the state’s revolving loan fund is another option, but Walsh described it as a “best-case scenario.” He said it may be possible, but that it would have to result in the reduction of coal power generation.
Logansport Utility Service Board Chairman Jay King said at Thursday’s meeting that NextEra Energy essentially does not have coal in its portfolio, meaning meeting the stipulation for the revolving loan fund would not be possible. NextEra Energy did not return a request to confirm that Friday. A 2017 corporate profile on its website states its electric utility, Florida Power & Light Company, bought out existing contracts with two coal-fired power plants over the previous two years with plans to shut them down. One ceased operations in 2016, the document continues, adding another is on track to retire by 2019.
If it would be possible for LMU to fund the project through the state’s revolving loan fund, Walsh estimated it would result in about a 2-to-2.5 percent interest rate over 20 years. LMU would save about $1.8 million over 25 years under the scenario, he said.
The savings created by the solar field under the scenarios would likely not amount to enough to have an effect on LMU customers’ electric bills, Walsh said. It could mean more money for infrastructure and improvements without having to raise rates, however.
Assuming the scenarios panned out, King said the savings associated with them pale in comparison to LMU’s $80 million annual electric budget, which will likely rise closer to $100 million in 25 years. In that regard, from a business standpoint, King said the solar field doesn’t make sense.
“The numbers Eric’s presented haven’t made me think this is a very good idea and if it’s a good idea for Logansport, it’s for reasons that don’t go on a spreadsheet,” he said.
King said if those reasons include a desire to embrace green energy, then he’d need guidance from city officials.
Logansport City Councilman Matt Meagher responded to that request by recalling how the council has been reserved in the past when it comes to making decisions that could weigh down their successors.
“So this decision falls into that bucket of things that isn’t so blindingly obvious of a home run that I can sit here and say I’m willing to tie down the hands of the next six councils,” Meagher said.
He also said the solar field would lack a “meaningful impact” if it wouldn’t affect customers’ bills. Marty Monahan, a utility service board member, and LMU Superintendent Paul Hartman also indicated the project would not be worthwhile under the scenarios addressed Thursday.
But not all of the leaders at the meeting were ready to dismiss the project.
“Somewhere there has to be a way for us to do this, to make Logansport look as if we’re progressing, that we’re not dying,” said Mike Laird, a utility service board member.
While Logansport Mayor Dave Kitchell could not attend the meeting, he again described the project by phone Friday as a land use issue, explaining there’s little else that can be done with the property. The property is a brownfield site, which means contaminants have been found in the ground there.
The spreadsheet Walsh prepared for the officials allows for different variables to be plugged in so that other scenarios can be explored. Walsh encouraged the leaders to take advantage of the opportunity as they continue to consider the project.