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City Proposes Deal with Lakeland Mills for Energy System

By 250 News

Monday, June 07, 2010 08:46 PM

Prince George B.C.- The City of Prince George is prepared to enter into an agreement with Lakeland Mills to provide a District Energy System.  Council has given the first three readings to the  bylaw  which sets up the agreement with Lakeland.
 
You will recall, there had been a previous plan for a  stand  alone energy system that would see bio mass  burned to heat water which would be distributed by underground pipes  to a variety of buildings. The cost of that facility was in the $12 to $18 million dollar range. Residents of the Millar Addition opposed the  facility concerned it would add more particulate to the fragile airshed. While the City agreed to move the facility away from the downtown works yard to the north side of First Avenue, that did little to appease those concerned with adding more particulate matter to the air.
 
The new deal would see the City putting up the capital cost to set up equipment at  Lakeland Mills . The equipment would include an electrostatic precipitator to reduce particulate matter.   The reduction in particulate  is the equivalent of putting more than 5 thousand woodstoves a year out of commission.
 
Lakeland would supply the bio mass, and the City would install pipes about 10 feet under the CN rail tracks to George Street, then jog west to the “Utilidor” which runs in the alley west of George Street south to the civic buildings.
 
The heat would be provided to the following:
·         Ramada Hotel
·         Plaza 400
·         City Hall
·         Library
·         Coliseum
·         Two Rivers Gallery
·         Law Courts
·         4 seasons pool
·         Coast Hotel
·         Civic Centre
It is estimated the new system can reduce particulate by 100.7 tonnes per year. That includes reduced truck traffic as Lakeland says using this bio mass means they will not have to move it elsewhere.
 
The system will have a natural gas back up.
 
How much will it cost? The total cost of the project is $14,141,000. 
Most of the funding is already approved in grants:
 
·         Municipal Rural Infrastructure Fund grant : $ 5,332,000.
·         Green Municipal Fund Grant:                     $    461,000.
·         Canada Works (gas tax)                           $ 4,366,000.
 
The City has already budgeted $295,000 for soft costs such as consultant and design fees, and will need to borrow $3,687,000. The debt associated with this system will be retired within 3 years.
 
The next step in the process is to have an environmental assessment, and Council’s approval this evening has triggered an “alternate Approval process”. Because this agreement with Lakeland Mills is longer than 5 years, the electorate must approve it.   The alternate approval process means 10% of the eligible voters in Prince George will have to sign a notice that they oppose the agreement. That Alternate Approval process will end July 21st at 4 p.m. and requires signatures from  5,235 eligible voters in Prince George to stop the agreement from going forward.
 
The City will pay Lakeland $20.35 per mega watt hour used. City Hall uses about 800 mega watt hours per year,  and while there is little difference in the cost of the new bio mass energy system and the current cost for natural gas, the City says the benefits come from having a secure price for energy for ten years ( at which time the agreement can be renegotiated), reduced maintenance on expensive boiler systems, reduced carbon taxes, it will sustain industry (Lakeland) and will create a new source of non-tax revenues for the City from other building owners who buy into the system.
 
It is believed the new energy system will be an attraction for those interested in developing in the downtown core because of the reduced space needed for a heat exchanger and the secured price for energy.
 
It is expected the new system will be ready for operation in 2012.
 
Councillor Don Bassermann hinted he's heard some excitement  in the community  from potential  users of the system who are eager to see how this will work.
 
Bob Radloff,  who is  overseeing the district energy system project says the system could be expanded  by 30% without increasing the  capital cost.

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Comments

At first blush, not too bad. If Lakeland is involved in this that is a good thing.
Oddly enought none of the nay sayers haven`t jumped in yet...must be doin thar research.
Wait ..... LOL ...
There are so many aspects to this, it is not that simple.

1. What happens when Lakeland goes under?

2. What happens when Lakeland could operate better from another location?

3. The City Hall uses 800 mega watt hours per year. At the rate shown, that is just over $16,000/year. What about the other city buildings?

4. How much will the other users be paying?. The city, through its ability to attract funding from other sources has paid for much of the infrastructure. Is this being gifted to other users as a promotional rate and the cost will not be recovered to use elsewhere? Will the City sell the energy to other users at higher rates or will Lakeland be making separate deals?

5. Who will be left holding the bag to continue the committment to the other users should Lakeland operations quit?

Just a quick overview.

The information provided is really not a pro fporma of any sort.

And then, of course, there is considerably more information required regarding the particulates. "the equivalent of putting more than 5 thousand woodstoves a year out of commission" We do not have that many woodstoves. Talk about the actual things we will be putting out of commission. NOx from natural gas boilers?

Then let us not forget about all those things we typically forget about - operations and maintenance. Will Lakeland be providing that service for the sale price of the energy? Or will that be an extra? Or will the City be doing the maintenance? After all, they are funding the infrastructure. Who is building it? Is that $14,141,000 a guaranteed price to the City for the supply of the system?

There is som much detail that is missing, the information that is provided is virtually meaningless.

I notice that this was not in the package to Council tonight. It was a handout. Was this planned on purpose?

Where can we see the entire information?
The price of garbage collection is going up AGAIN!!
LOL 5000 woodstoves out of service!
What happens in 2012 when the world ends?

There are no guarantees. Lakeland is prob the #1 mill in the PG region (or possibly Dunkley). It isnt going anywhere for a long time. Its Sinclairs flagship and the kilns are new and the energy system only further strenghtens it.

The particulate is a valid concern.
Another big waste of money by city council. Does the 14 million or so count the modifications required by the building owners to tie into a glycol heating system?
The precipitator is long overdue as the sawmill is presently permitted for 230 mg/dscm of particulate. What is the expected particulate output from the precipitator? Given the energy system output will need to be ramped up is there really going to be a drop in tons of particulate or is the amount per cubic meter just going to drop?
Seems very expensive to install such a system for potentially 180 days per year of heating. How about a few particulars like payback, present heating costs, how many building owners have actually signed on to purchase heat from this new system? What is the actual btu demand at present? Certainly a lot of unanswered questions.
I suggest people go down and sign opposing this white elephant.
Is there no end to the wasteful spending by the city of Prince George? The present city theme seems to be raise taxes, and spend, spend, spend.
"What happens in 2012 when the world ends?"

I am sorry, but you are confusing the "Acts of God", which are not covered by contract other than making sure that there is insurance in place, with "Acts of man", under direct control of the parties to the agreement.

So, a stupid, snide comment which has no place in a rational discussion which deals with mitigating potential future outcomes which is one of the key purposes of a contractual relationship.
"Its Sinclairs flagship ....It isnt going anywhere for a long time"

How many such companies can we list that people thought the same thing about in the past? We do not even remember some of their names anymore, I am sure.

I think one thing can be said with a great deal of certainty. PG will still be around when Lakeland no longer exists, especially when Lakeland no longer exists at that location.
This is plane madness. It is Radloffs last kick at the can. and it’s a big one.

If green is so important why not look at some of the building designs for our climate. The sketches we have seen of the new police building it has floor to ceiling windows . This can be change with the stroke of a pen and would save on heating costs..

And maybe we should look at the National Building Code and have it changed to more conservative window area and even the size of a residential structures being built at the present time.. Why would a family of three people need to live in a home that has 3000 plus sq ft.
Cheers
I find it disturbing that the city of Prince George would partner up with a corporation that would hang their own long term employees out to dry. Winton Global, a sister company of Lakeland, owned by Sinclair Enterprise, has been shut down for the last two years. Why wouldn't they partner up with a company that has been shut down, to get them restarted and re-employ the 300 people that just received termination letters this week? They are terminating all of their employees without severance. Does this sound like a good company to partner up with? Maybe the city should take a longer look at Sinclair's business practices before partnering up with them. Is it the employees severance moneys owed that will help fund this project? One has to wonder. Does anyone know of a good corporate lawyer?
Maybe they will need to reopen Winton Global because of this contract. Wouldn't that be nice. One can only hope.
Sinclair = Sinclar .....
Why does the article state that the debt will be retired within 3 years when the actual documents from the city state that it is a 30 year payback??

And what credible businessperson would consider a 30 year payback? And that is after 75% of the project funding is covered from grants!! We have ZERO assurances that the cost of energy will remain fixed for 30 years, therefor it could (and very likely will) be much longer than 30 years to payback the debt.

How was the budget created? Does this include all interface works required in each of the 10 buildings? Engineering fees are normally more like 10%, how does the City plan to get it for their estimated 3ish%? Or have they buried the cost somewhere else? What do we do if the project comes in at 10% over budget, pushing the payback even further to 40+ years??

Also, all that we are guaranteed in regards to the energy costs is a known rise in price. If you are so foolish as to believe that is a good thing, there are various natural gas companies in your neighborhood right now, ready and willing to sign you up for a guaranteed price.

How long will the installation last? Pipes and machines do not last forever, likely the whole system life is only 30 years.

Regarding particulate matter, with Lakeland operating in the bowl area, why are they not forced to provide an electrostatic precipitator as a condition of continued operation?

TL;DR - Citizens of PG are getting ripped off. Score: City Hall 1 Residents 0.
1. There is no need for this project at all. It is a carry over from Colin Kinsley, and the whole project makes absolutely no sense.

2. How much negotiation has taken place between Teresan Gas, BC Hydro, or other suppliers of Gas,and the City to come up with a long term price agreement, that would make this project useless. I suggest they have never discussed anything, because to do so, and to get an agreement would mean that the project is dead. Heaven forbid that should happen.

3. Lakeland states that they would reduce truck traffic because they would use the biomass on site. They neglected to mention that they would also be hauling biomass to the University.

4. The City has been planning the project for a long time, and I suggest that, that is one reason why they are doing all the work on River Road.

5. The City obviously is not to concerned by the reverse onus petition because they have the funding in place, and fully plan to go ahead with the project, and to hell with the Citizens of Prince George. Very much like the Liberal Government and the HST.

6. Hopefully PACHA, and the Millar Addition people will get something started, and we can stop this horseshit in its tracks.

7. This whole project is nothing more than a **make work** and **job security** program for the City Planners, etc; We need to have a large number of Planners, and maybe the manager, fired.

8. Who the hell do these people think they are, to go ahead with a project of this magnitude with little or no input from taxpayers.

9. Most of this has been done behind closed doors, and is about as far from being democratic as you can get.

10. $10 Million pissed into the wind by a bunch of wacko's and we cant get proper roads, and the water and sewer pipes in the downtown area are bursting.

11. I for one will be more than happy to sign the reverse onus petition, and volunteer my time if needed. What we need now is for someone to come forward and lead this petition.