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City reaps $600,000 windfall from sale of energy plant

Friday, September 26, 2008 12:03 AM PDT

By Leila Summers

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A Bellevue-based energy company Thursday announced it will buy the gas-fired power plant in Longview’s Mint Farm Industrial Park for $240 million, a transaction that will give the city a tax windfall and finally put the long-troubled plant to use.

Puget Sound Energy is buying the 9-month-old plant from Wayzata Opportunities Fund, a Minnesota-based investment firm that bought the then-unfinished plant for $27 million in 2005.

The sales price announced Thursday is nearly four times the $62 million assessed value, according to the Cowlitz County Assessor’s Office.

The City of Longview will collect $600,000 in taxes from the transaction, said Longview assistant city manager Dave Campbell. The money will go into the city’s capital projects fund.

Also, the investment is a good sign for the future of the Mint Farm, he said.

“I’m sure they’re not going to spend that amount of money to shut it down,” Campbell said. “It’s helpful to have industrial operations going rather than shut down or mothballed.”

Power developers Avista-Steag first conceived the Mint Farm Energy Center in 2000 and started work in 2001, but work stopped a year later because the Enron debacle soured investors on energy projects. In 2005, Wayzata acquired the plant through bankruptcy proceedings, and Longview contractor JH Kelly finished building the plant last summer.

Puget Sound Energy spokesman Roger Thompson said his company is constantly searching for new sources of energy. It was attracted to The Mint Farm facility because it’s “almost new off the showroom floor,” meets environmental requirements and “it comes at a competitive price,” Thompson said.

The Mint Farm plant offers “combined-cycle” technology — a system that reuses waste heat to boil water and run a separate electricity-generating turbine, Thompson said.

“It’s sort of like recycled heat,” he said. “It’s a very good unit.”

Puget Sound expects population within its service area — an 11-county zone around Puget Sound -— to grow by more than 1 million over the next 20 years. In addition, some of the company’s long term power supply contracts will expire in coming years.

As a result, the privately owned utility is trying to buy 4,400 megawatts of additional power capacity by 2027 — more than twice the peak power demand of a city the size of Seattle. The Mint Farm project can produce up to 310 megawatts — enough to supply 300,000 homes, Thompson said.

The energy center currently employees around 15 employees, all of whom likely will be retained under the new ownership, Thompson said. It’s too soon to tell whether the company will hire more employees, he said.

Puget Sound will use the plant to meet its basic demands, so the plant will run regularly, not just during periods of exceptionally high electricity demand.

The company is awaiting approval of the purchase from the Federal Energy Regulatory Commission before its assumes control, Thompson said. Once that occurs, the plant will be idle for six to eight weeks for inspection, he said.

“Once we gain ownership, then we would restart the facility end of year or early next year,” Thompson said.

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feistyone wrote on Sep 26, 2008 5:27 AM:

" Wouldn't it be nice if the community could share the windfall by lowering electricity rates, or property taxes, etc? "

woodchuck wrote on Sep 26, 2008 5:38 AM:

" An extra $600,000, didn't we just have a discussion about the bus service and the need to raise taxes??? Wouldn't this money assist with that? "

fencepost wrote on Sep 26, 2008 7:01 AM:

" How much did the city invest -- in property development, in staff time, etc. -- to reap this "windfall"? "

lucky1 wrote on Sep 26, 2008 7:36 AM:

" That will help with the budget shortfall or the council could just build a nicer dog park. "

Kelso Resident wrote on Sep 26, 2008 7:39 AM:

" Hmm, I wonder what they are going to use the money on. I hope it's something good. that all of us can use. Maybe help enhance local buildings or something like that. Or a new campaign to pull in big businesses. I wouldn't mind seeing Best Buy, K Mart or a Costco. "

roudy russ wrote on Sep 26, 2008 8:29 AM:

" Sounds like it's time for the city council to get raises again. "

Kelsonian wrote on Sep 26, 2008 8:53 AM:

" Its a good thing that there will be a LNG facility nearby....

*rolls eyes* "

gimpy wrote on Sep 26, 2008 9:47 AM:

" Doesn't anyone wonder why Puget Sound Energy is willing to spend 4 times the assessed value to buy this plant? Something smells fishy here to me and I'll be waiting for the other shoe to fall. The McQuarry Group from Australia and Canada just bought PSE and they must have something up their sleeve. Big companies don't spend any more money than they have to, so watch out for some finagling here. "

cynic954 wrote on Sep 26, 2008 9:54 AM:

" 4 times more than the assessed value! Great now the ASSessors office will think that everybodys property is undervalued by that amount. "

Viewpoint wrote on Sep 26, 2008 10:30 AM:

" Let's connect the dots. FERC just gave it's blessing to the LNG terminal. The Mint Farm plant is 'gas-fired'. A little more into from TDN is warranted. The gas is not coming from cows or bloggers. "

Thought wrote on Sep 26, 2008 12:29 PM:

" Donate it to the $700 billion bailout fund.Oh sorry. Its up to the tax payers to cover that. "

The Stig wrote on Sep 26, 2008 12:55 PM:

" Gang, the reason the plant sold for 4 times more than assessed value is because the county assessors office and Puget Sound Energy are valuing the project in two different ways. The County *assessed* the value of the plant and the land - how much are the concrete and steel bits worth. Puget Sound Energy based their purchase price on how much money the plant will make them over some number of years. "

grams wrote on Sep 26, 2008 1:14 PM:

" There you go Viewpoint. Some of us have been watching the buy outs of Washington State utilities for a long time now. Starting with Montana Dakota Utilities which bought Cascade Natural Gas. Then as gimpy stated the McQuarry Group just bought Putget Sound Energy. Tom Wilson who represents Cascade N.G. and is running for Cowlitz County Commission favors LNG. Kathleen Johnson , the incumbant does not. I assume that this gas fired plant is a customer of Cascade. Our Governor is a raging mother lion when it comes to the Puget Sound area but does not want to make a dicision about LNG, and doesn't even know SW wasthington exists. Could that all be part of the spider web? Don't get me wrong, I am glad for the infusion of income to this area but fool me once shame on you , fool me twice shame on me. Funny how these little events keep popping up like the Labrea Tar Pit bones. There is something beneath the surface here people. "

El Gabilon wrote on Sep 26, 2008 2:49 PM:

" The amount of money the city should have "reaped" is ONE POINT FIVE MILLION. And yes, a company often purchases an electric plant with no intention of using it. And yes, there is more beneath the surface going on that the taxpayers are being told. "

Viewpoint wrote on Sep 26, 2008 3:12 PM:

" And is what I've heard true that the Williams Northwest pipeline, into which it's claimed the LNG would feed, is already at capacity? Sounds like SW Washington will get the LNG, the carbon tax, few jobs, disrupted river traffic, safety and environmental risks,and no need for the electricity which will go elsewhere along with the profits. And unless our county and city officials get smart, maybe a little tax money. "

gimpy wrote on Sep 26, 2008 4:36 PM:

" Viewpoint, you have it on the button. Ask Williams, they will tell you they are "fully subscribed" with long-term contracts. There is something rotten going on here. Ain't it great, we get the CO2 emissions and somebody else gets the electricity? Kinda like LNG, we get the risk and somebody gets the gas to burn. "

Louie wrote on Sep 26, 2008 5:06 PM:

" Something doesn't sound right about this deal.
Does this mean we all should be able to sell our property for 4 times assessed value?...don't think so.
I really would like to know "the rest of the story...?"
This windfall better go for something really great that benefits the community and that doesn't mean salaries for city or county employees!!!! "

Louie wrote on Sep 26, 2008 5:08 PM:

" ...another comment...fencepost is exactly right about the development costs for the Industrial Park project. Much of the land still sits idle waiting for the frogs in the spring. "

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