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Archive for Monday, February 28, 2011

Sale of bonds for Bowersock’s hydroelectric plant on north bank of Kansas River to close next week

February 28, 2011

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A project to build a $25 million hydroelectric power plant on the north bank of the Kansas River is on the verge of becoming a reality.

Sarah Hill-Nelson, an owner of the Lawrence-based Bowersock Mills & Power Co., confirmed Monday that the company has found buyers for all the necessary bonds it needs to build a new plant near the northern end of the downtown Kansas River bridges.

“It is not over till it is over, but we’re now anticipating to begin construction very shortly,” Hill-Nelson said.

Financing has been the largest hurdle for the project, which was announced in 2009. The company has received the necessary federal permits to build the plant, which will operate in tandem with Bowersock’s existing plant on the south bank of the river. In November the company reached a long-term deal for the Kansas City, Kan., Board of Public Utilities to buy all the power from the plants.

But finding buyers for the nearly $25 million in bonds had been problematic as large institutional investors hadn’t taken the time to research the project. But Hill-Nelson said the project received a boost when the Securities and Exchange Commission ruled that qualified individual investors would be allowed to directly purchase the bonds. That allowed the project to court more regional investors.

City leaders on Monday were pleased to learn of the bond deal, which is scheduled to close March 11. They said the new “landmark” power plant building will help market Lawrence as a community that wants to be a player in the green energy market.

“In terms of a per capita basis, we’re going to be producing as much renewable energy as any community in California,” said City Commissioner Aron Cromwell.

The plant will produce enough electricity to power about 5,400 homes. The city of Lawrence will act as an issuer for the bonds, but won’t have any financial responsibility to repay the bonds. Private bond buyers are financing the project, but buyers will receive tax breaks that were part of the federal stimulus program, Hill-Nelson said.

Comments

oneeye_wilbur 3 years, 1 month ago

Interesting that the Kansas City Ks board of public utilites is going to buy the power. Maybe warren buffet talked them into it so the power can run the new casino that Lawrence passed up.

As far as a "closing sign on the power plant" in the future, it would be more like:

"Lawrence, Kansas City commission takes bold leap and gets into the power business." Bowersock Power Plant stays in Lawrence and City plans to create power for the Arts Center, the Amtrak Depot, the City Hall, the train station Visitors Center, the Carnegie Building, the new 18 million dollar library and all parking lots downtown and if there is enough power left, just a bit, to light up city hall so that they won['t be in the dark.

The city has moved from the Civil War to the modern century of progress.

3/22/2050

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Clark Coan 3 years, 1 month ago

I think it's pretty cool that 5,400 homes can be powered by the two plants. It is my understanding that the hydroelectric plant on the south bank will continue to operate.

Now, KU needs to put small wind turbines on top of Fraser Hall and a large one on West Campus. Plus, a company needs to put a hydroelectric plant below Clinton dam. The Lake of the Ozarks produces lots of electricity..

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defenestrator 3 years, 1 month ago

Isn't that the spot where you can give a homeless person a bottle of purple passion in exchange for a tug job? Is nothing sacred?

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Matthew Fowler 3 years, 1 month ago

It's going to destroy the view from the levee, and no more jogs up there

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BigPrune 3 years, 1 month ago

Having this ugly monstrosity.....Does this mean Corliss will be leaving soon? What a wonderful sight when coming into Lawrence, and to stay at the Marriott and open the curtains to see that over the Kaw should help repeat business. How do these things get a pass so easily, because the Earth Nazis aren't screaming? At least the City bought Farmland Coop to beautify our city. The City fathers will have to look at this "thing" everyday they're at work.

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matahari 3 years, 1 month ago

“In terms of a per capita basis, we’re going to be producing as much renewable energy as any community in California,” said City Commissioner Aron Cromwell"

My, that's a sweeping statement, and what exactly does it mean?

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Bladerunner 3 years, 1 month ago

Perhaps they could sell snow cones out of it to recoup some of the costs.

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Les Blevins 3 years, 1 month ago

Some day the news may read "Hydroelectric Plant on South Bank of Kansas River to Close Next Week - City to pick up demolition costs of $5 million"

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50YearResident 3 years, 1 month ago

Is the picture dawn to scale? It doesn't look like much of a building to generate $25 million worth of electricity any time soon.

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Les Blevins 3 years, 1 month ago

The feed-in tariff is a great way for local governments and businesses to offset their own emissions by achieving up to 100% renewable energy, while paying less than other methods would cost. It's also possible to make money by selling power to the grid in some situations under the feed-in tariff. The 1978 federal Public Utilities Regulatory Policy Act (PURPA) has been gutted by Congress in recent years for some parts of the country. However, in California, the Public Utilities Commission is about to approve a new set of "standard offer" contracts for Qualifying Facilities, as part of California's implementation of PURPA. These contracts will be familiar to those who were in the wind business in the 1980s, when standard offer contracts were common under an earlier incarnation of PURPA. The new contracts will allow customers to build Qualifying Facilities (QF, renewable energy or co-generation facilities) up to 10 MW and sell excess power to the utilities at a set price.

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Les Blevins 3 years, 1 month ago

"Community energy" projects are generally defined as those between one and 20 megawatts (MW). This is a sector that is often overlooked. Small-scale renewables like solar photovoltaics, and large-scale renewables such as wind, geothermal, and concentrating solar power, receive far more attention. The advantage of community energy projects is that communities can develop these projects themselves using local funding iand add significant amounts of renewable energy to their local grid without waiting for outside developers. There are many ways businesses and local governments can build community energy projects.

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Les Blevins 3 years, 1 month ago

Feedstock for the power plant that I have proposed to the city is the trash steam the city generates and the city is considering locking the city into a long term agreement with an outside firm. This feedstock is pretty consistent week in and week out and the city is obligated to deal with it at taxpayer expense and the city has traditionally dealt with trash by paying to have it hauled to the landfill and then paying by the ton to dispose of it and these costs will only keep on increasing.

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Les Blevins 3 years, 1 month ago

Feedstock for hydroelectric plants is river flow, so I can’t help but wonder if river flow is sufficient for two plants enough days of the year to justify Bowersock having two plants, and if not who would be responsible for the removal of the south plant. And if the south plant is on city owned land would city taxpayers be responsible for its removal? This question needs to be examined by our esteemed city commissioners and the findings made public. Also who will be held responsible to the investors if the river flow turns out to be insufficient during several months of the year to generate enough revenue to pay off the bonds? And finally it seems to me that I’ve read that extended drought is seen to be more likely in the Kansas River basin in coming years due to global warming.

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KS 3 years, 1 month ago

That is without a doubt a very ugly building. Looks like something that might fit out on the farm. Why not give it some character. Give it some very long lasting stone; something! This is going to be an embarassment to dowtown Lawrence. BTW, I am in favor of the plant, just don't like the looks of it.

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Sigmund 3 years, 1 month ago

srj (anonymous) says… "I wonder what interest rate they had to pay to finally get the bonds sold?"

Don't know and don't care, There is a rule when it comes to new offerings of stocks or bonds, "if you can get in on the IPO you don't want them." Why? If a new issue is available to you, especially a small offering like $25 million or so, it means lots of institutional and very large investors passed before they got around to offering them to you. The whole, "But finding buyers for the nearly $25 million in bonds had been problematic as large institutional investors hadn’t taken the time to research the project," is bullcarp, they looked and said "thanks, but no thanks."

My guess is they were all bought up by the "partner" Kansas City, Kan., Board of Public Utilities, who not only is going to buy all the power but also bought all the bonds. This is money available through Qualified Energy Conservation Bonds, or QECBs, and Recovery Zone Facility Bonds, and the project has a lot of different forms of risk and lack any guarantee. By buying them themselves they can turn a portion of their cash flow tax free.

The other clue, "But Hill-Nelson said the project received a boost when the Securities and Exchange Commission ruled that qualified individual investors would be allowed to directly purchase the bonds. That allowed the project to court more regional investors."

Translation, "no respectable underwriter could be found who could move these, so the SEC waived a lot of rules that they ordinarily claim are necessary to protect the investing public, and allowed us to sell them directly to the suckers!"

Seriously, a micro hydroelectric plant on the Kaw? If it were economically sound project it would have been done long ago. Anyway I hope some environmental group, KHDE, EPA, Bozo, Sven, or Merrill doesn't file a bunch of lawsuits demanding construction stop until impact statements can be done on the native two-headed catfish population.

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macon47 3 years, 1 month ago

i suspect cromwell and hill-nelson are also offering the kaw river bridge for sale??

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Steve Jacob 3 years, 1 month ago

I wonder what interest rate they had to pay to finally get the bonds sold?

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