"We know a whole lot about Sallisaw. That gives us an advantage should economics change - either on the coal side or the natural gas side," Bill Braudt, Tenaska general manager of business development, said Friday morning. "We will always keep Sallisaw in mind."
City Manager Bill Baker said Thursday that Tenaska came to the conclusion that the plant was not an economically viable project because of difficulties they encountered with equipment suppliers and increased costs. He noted that the public opposition to the plant was not a factor in the company's decision, according to the letter sent by Tenaska to the city.
Last year Tenaska Inc. proposed building a $1 billion-plus coal-fired power plant at the Sallisaw Landfill southeast of the city. In September, city commissioners approved a purchase option agreement with the company for 950 acres of land at the landfill.
But on Tuesday, the city received notification that the company would not be extending their option to buy the property.
According to the agreement, the company had three six-month extension periods on the option to buy. The extensions gave the company time to research the property, city officials have said.
As part of the agreement, the company paid $10,000 for the initial lease option, and extended the option one time, at a cost of $15,000. The company's next extension deadline is due in September and would have been $20,000. The fees paid by the company are non-refundable.
"They advised us they have no plans to extend in September," Baker said, noting that after September the purchase option is null.
Braudt that they worked hard to make the project work, but several different factors occurred outside the control of the company or community. He said that large base-load coal-fired plants are sensitive to steel and labor prices.
"They (prices) have done nothing but go up since we opened our mouth," Braudt said.
Throughout the process, Braudt said they located equipment for the plant at a favorable price, which would have been significantly lower than current prices. As they worked through negotiations on the equipment, they discovered the equipment was no longer available, which left them scrambling to find replacements. The replacement equipment, Braudt said, was "off the charts too expensive" to make the project competitive.
"That's the real reason," he said.
The company's decision sparked disappointment from city officials who thought the plant could mean an economic boon to the county, while those against the plant expressed satisfaction because of the detriment they felt the plant would be to the environment and to public health.
Baker said he personally thought the plant would have been a benefit to the economy and city.
"I think it's a shame we've lost it," he said.
Braudt lauded the Sallisaw community and their helpfulness. "They did everything in their power to make this project work."
REASON FOR WITHDRAWAL
He explained that the reason to build coal-fired plants as opposed to natural gas-fired plants is that natural gas is so expensive. Braudt equated the situation to the decision-making process on buying a more expensive car that has better gas mileage or buying a lower-cost car with worse gas mileage. In the long-term, consumers would save on the higher-priced car, but not if the price of the car significantly increases. The same goes for the power business - when there are higher capital costs, the more sensitive the project is to prices.
He explained that a coal-fired plant is mostly steel and mostly hand-built, meaning they buy the steel and put the plant together. He said that commodity prices of copper and steel is the biggest chunk of the cost.
"The Sallisaw area remains a good place and we are very encouraged by the people," he said. "We're not giving up totally on that concept."
But he said that it was unfair for the company to go down the path of a coal-fired plant when the costs were too high.
"We thought, let's be fair to the community and tell them what we're thinking," Braudt said. "If something changes we would be back in front of the commissioners."
As for future projects, Braudt said there are future plans everywhere for Tenaska, which has primarily built natural gas power plants. The company is currently involved in a coal-gasification project in Illinois.
When asked if a natural gas-fired plant could be an option in the company's future for Sallisaw, Braudt said, "Could be."
Since the news broke that Tenaska was considering an option to buy the city property, residents with the Sequoyah County Clean Air Coalition lobbied against the proposed project. The non-profit coalition began several years ago when another coal-fired generation plant company considered building in the McKey area.
OPPOSITION HAPPY
One member of that group, Jeff Edwards, called the news that the plant was withdrawing "fantastic."
"I've very happy about that, of course," Edwards said.
Edwards was not surprised by the news because he said many companies getting into pulverized coal are getting out because of the high expense.
While Tenaska is not moving forward with plans in Sallisaw, Edwards said the coalition's efforts will not cease.
"We'll still keep our efforts active," Edwards said. Some of those efforts will be aimed at strengthening the state's mercury emissions rule.
He also said that he still believes other power companies are looking in the area.
"Any pulverized coal plants we're going to be in opposition to," Edwards said.
While the coalition was outspoken about the objection to the plant, Braudt said the opposition did not play into their decision-making process at all.
"We're used to, in large scale units, some people don't want things in their back yard," he said.
But he pointed out that the Sallisaw site was ideal because of its shielded location, which would be a great site for industrial development.
Steve Dobbs, a coalition leader, was also pleased with the news about the plant scrapping plans to build in Sallisaw. But he too said the coalition's efforts will continue.
"I think we've really got a lot of people's attention in the community," Dobbs said, noting that the coalition had good support from the public.
He said the proposed coal plant has brought out other issues in the county, including litter problems in the rural areas, the possible investigation of recycling, and information on grant money to do a wildflower planting on Interstate 40.
Dobbs said the coal plant issue has been good in that it helped the group find people who are genuinely concerned about what goes on in the community.
"If any more are proposed in the future, we'll object," Dobbs said.
In the future, Edwards and Dobbs agree that their hope is that elected officials will get public opinion before signing a deal in the future - not only from those in the city, but from residents surrounding the city who could be affected.
Dobbs said his hope is that officials will see there are people out there who want to have input and to include others in decision-making.
When Baker was asked if the public opposition would influence the city's future industry prospects, Baker said elected officials are always going to take that into consideration. He said if city officials think something is going to hurt the community, they're not going to do it.
He added that the city plans to be selective about future industry they are recruiting and they don't want to do anything just for the sake of growth.
BUSINESS, INDUSTRY STILL IN CARDS
Although the Tenaska deal fell through, it doesn't mean the city will stop pursuing big business in Sallisaw.
Baker said there is some discussion of possibly trying to take the property they were trying to sell at the landfill and develop an industrial park there. He cited the excellent location, rail access, and the fact that the property is city-owned.
"We've got some valuable property out there," Baker said.
While he said the city does have 35 acres left at the city's current industrial park, there is no rail access and the land is split up on the north and south sides of the road.
The city isn't letting this failed opportunity dissuade them from trying to get new jobs into the city.
"For a city to grow, you've got to have good jobs," Baker said.
He said they plan to continue to work with the chamber, economic development, and the Oklahoma Department of Commerce.
"Sallisaw is primed to get additional industry and business," Baker said.
Sallisaw Mayor Shannon Vann said while they were hopeful the Tenaska project would move forward, the city will continue to look at other industry options and try to recruit other businesses to Sallisaw.
"You never know what may come down the road," he said.
