The Jasper Clean Energy Center: How did we get here, and why?

In light of the current debate regarding the proposed Jasper Clean Energy Center (JCEC), it may be helpful to understand the history of the Jasper Power Plant and the sequence of events that led the City of Jasper and the Jasper Municipal Utility Service Board (JMUSB) to consider alternative uses for the Jasper Power Plant. This narrative is an attempt to report how and why the JMUSB has pursued the re-purposing of the Jasper Power Plant with the assistance of the Twisted Oak Corporation.

The Jasper Power Plant was commissioned in 1968 as a 14.5 megawatt bituminous coal stoker plant. At the time it was commissioned, this plant and another older plant, also owned and operated by the JMUSB, supplied all of the electricity required by the City of Jasper. During the early 1970’s the electric power requirements of Jasper grew, and the older power plant was decommissioned due to its inefficiency.

Originally the Jasper Power Plant provided base load electricity, operating 24 hours a day, seven days a week, meeting the normal electric power demands of its customers, the residents and businesses of Jasper. When the plant could no longer keep up with the electric power demands of its customers, its role was changed to that of a peak shaving plant.

The JMUSB was at this time purchasing power from the grid, and during times of peak demand, the Jasper Power Plant would be operated in order to prevent the city from paying premiums or penalties for exceeding its contracted power amount. For example, if the city had a contract with an outside power producer to purchase 50 megawatts of power, they would only run the Jasper Power Plant when they expected local demand to exceed this 50 megawatt level.

In this scenario, the Jasper Power Plant would allow the electric customers of Jasper to have a combined demand of up to 64.5 megawatts (i.e. the 50 megawatts from the outside power contract and the 14.5 megawatts generated “internally” by the Jasper Power Plant) before exceeding the contracted amount of power, and incurring costly premium payments.

The cost of power generated by the Jasper Power Plant was higher than the base contract price from the outside providers, but was lower than the premiums and penalties charged by the outside providers for exceeding the contracted power level. The Jasper Power Plant operated in this peak shaving role from the early 1970’s until 2007. In the mid 1990’s the plant was upgraded with the addition of an electrostatic precipitator which greatly reduced the particulate emissions from the plant.

In 2007 three events converged to practically bring production of the Jasper Power Plant to an end. Coal prices rose sharply, overall demand for electrical power declined significantly due to the slowdown of the economy and industrial production, and the City of Jasper entered into a power purchase agreement with the Indiana Municipal Power Agency (IMPA) whereby it agreed to purchase 100% of its power from  IMPA.

The city then entered into a separate agreement with the Midwest Independent System Operator (MISO) to use the Jasper Power Plant as a standby asset to support efficient grid operations. MISO controls a large portion of the high voltage grid covering many states in the upper Midwest. They operate in a role similar to an air traffic controller: they don’t own the generation or transmission assets, but they monitor and control the power level on the high voltage grid, making sure that supply always exceeds demand.They are the referees who tell power plant operators when to operate their plants and at what levels.

Under this set of operating guidelines, the Jasper Power Plant was on constant standby, but was actually operated as few as five days per year. Jasper Municipal Utilities receives payments from MISO for the 14.5 megawatts of standby capacity, and also payments for the power actually produced by the Jasper Power Plant when called upon to operate, but these payments fall short of the costs of maintaining the plant and keeping a staff to operate the plant when required.

At this point the JMUSB began looking for options regarding the plant. Should the plant be decommissioned and bulldozed? Should the plant be sold to get the operating losses off their books? Or, should the plant be converted to use a different fuel, other than coal, and be retooled for future operations?

The board hired consultants from the Black & Veatch Corporation, one of the most respected power plant design firms in the world, to perform an assessment of the Jasper Power Plant in order to get an idea of the potential value of the plant. The report from Black & Veatch indicated that the Jasper Power Plant was in very good operating condition and would need no major repairs for the next five years, if operated in the same way it was presently being operated.

The report put a market value on the plant ranging from a $4 million liability to having a value of $12 million depending on fuel costs and how the plant would be utilized. A third conclusion of the Black & Veatch report was that it would cost between $30 million and $80 million to convert the plant to utilize fuels other than coal.

Given the large range of estimates regarding the value of the plant, and the high costs involved in converting the plant to burn fuels other than coal, the JMUSB issued a request for expression of interest (RFEI) to outside parties, requesting their ideas for possible future uses of the plant. They received nine responses to their RFEI, and eight of these responders came to Jasper and toured the plant. Based on this level of interest, the JMUSB concluded that the Jasper Power Plant did have significant value.

The JMUSB then followed the RFEI by issuing a request for proposal (RFP), a more specific request asking for actual project specifications. They received four responses to this RFP. One of the responders proposed to purchase the plant from the city and to continue to operate the plant as a coal-burning facility. Another proposal recommended converting the plant to use municipal waste as its fuel source. A third proposal was for converting to a combination of municipal waste and coal as fuels, and the forth proposal was to convert the plant to be fueled by a combination of natural gas and miscanthus  grass, and to lease the plant from the City of Jasper for the term of the project.

The board was not in favor of selling the plant, because it would then lose control over its future operations. Both of the municipal waste options involved importing waste sources from other municipalities to Jasper—an idea that was ruled out as not being in the best interests of the city. It was through this process of elimination that the JMUSB arrived at the position of entering into negotiations with the responder who had proposed the natural gas/miscanthus option, Twisted Oak Corporation, with CEO and President Jay Catasein.

The JMUSB has been negotiating with Twisted Oak Corporation for several months regarding the specifics of an acceptable lease agreement. At present the negotiations are still ongoing, and as such the official agreement between the City of Jasper and Twisted Oak Corporation does not yet exist. However, many of the basic design and operational parameters being discussed by the board and Twisted Oak have been presented to the public. These include: the Jasper Power Plant will be upgraded to include a 60 megawatt gas turbine generator combined with upgrading the present plant boiler to burn sustainable dedicated biofuel crops, specifically miscanthus grass, producing approximately 15 megawatts fueled by the miscanthus grass. The proposed power plant will need to conform to all existing and future requirements for emissions established by the Indiana Department of Environmental Management (IDEM) and the U.S. Environmental Protection Agency (EPA). Twisted Oak Corporation will be responsible for all necessary upgrades to the facilities, will lease the plant from the city, and will operate and maintain the plant after upgrades have been made.

The working name of this project is The Jasper Clean Energy Center (JCEC). Some of the anticipated benefits of completing the proposed JCEC project are:

• Increased revenue for the City of Jasper through lease payments from Twisted Oak Corporation.
• The creation of 32 new full-time local positions for operation and maintenance of the JCEC.
• An increase to the local tax base from the addition of the existing Jasper Power Plant and any future additions, thus decreasing the amount of taxes paid by other residents and businesses.
• Creation of up to 150 construction jobs at the peak of plant renovation activities.
• Creation of up to 50 new agricultural jobs related to growing, transporting, and processing the miscanthus grass.
• Increasing agricultural opportunities for producers to farm marginal acres. Miscanthus grass can be grown in areas where traditional crops wouldn’t produce adequate yields.
• The ability to integrate more wind-generated power into the grid. The new JCEC will be a dispatchable generating asset, meaning it can be turned on very quickly, can generate at full capacity within minutes, and be controlled to balance the fluctuations in power levels associated with wind power generation. Adding more wind power to the grid lowers overall carbon, sulphur, and mercury emissions compared to burning traditional fossil fuels.
• The potential to serve the local Jasper market in the event of large, grid-wide power outages.
• Increased utilization of existing city utilities such as water and gas, acting to stabilize costs of these utilities to all other Jasper utility customers.
• Increase in tourism based on people coming to tour the complete JCEC operations, from the growth of the miscanthus plants to the processing and firing of the miscanthus in the JCEC boiler.

The main concern of the group opposed to the JCEC project focuses on local air quality in light of potential emissions from the JCEC. Power plant emissions are regulated by the Indiana Department of Environmental Management (IDEM) and the U.S. Environmental Protection Agency (EPA). It will be stipulated in any agreement between the City of Jasper and Twisted Oak Corporation that the operation of the JCEC will fully comply with all existing and any future IDEM and EPA requirements.

[The writer acknowledges significant background contributions to this article based on interviews with:  Gerald “Bud” Hauersberger (General Manager, City of Jasper Municipal Electric Utility), Wayne Schuetter (Chairman, Jasper Municipal Utility Service Board),  Jay Catasein (President and CEO, Twisted Oak Corporation), and Jim Dinkle (Executive Director, Dubois County Area Development Corporation).]