Tondu Corporation develops large scale, contract supported industrial projects with a strong economic base. Electricity generating power plants, industrial manufacturing facilities, and natural resource recovery based operations are examples of the kinds of projects we developed.
Description
T.E.S. Filer City Station is a coal, wood waste, petroleum coke and tire derived fuel facility with a rated output of 60 MW and 50,000 pounds of 600 psi steam per hour (the "Filer City Plant"). It was the first major industrial focused co-generation power plant developed in the state of Michigan. Tondu Corporation identified the Filer City Plant and was the project’s developer.
Principal Agreement
Electricity from the Filer City Plant is sold under a 35 year contract to Consumers Power Company and steam is sold to Packaging Corporation of America for use in their adjacent paper mill.
Financing
Tondu closed the construction financing for the Filer City Project on August 25, 1988. The Prudential Insurance Company of America provided $78 million of the project’s $87 million total cost as debt with a 19-1/2 year term and a fixed interest rate. Tondu led the effort to obtain the debt and equity for this project.
Performance
The Filer City Project began commercial operations in June 1990 and has enjoyed an outstanding performance record.
Environmental Record
The Tondu Filer City Michigan facility qualified to be a member of the "Clean Corporate Citizen" program by meeting rigorous standards of safe operation and environmental stewardship set by the Michigan Department of Environmental Quality. This facility is also a charter member of the U.S. Environmental Protection Agency's Environmental Performance Track that recognizes businesses who demonstrate strong environmental performance beyond requirements. The facility became a chartered member is 2000 and is one of only a few coal-fired power facilities to qualify in the U.S.
Technology
The Filer City Plant is fueled with a blend of coal, wood waste, petroleum coke and tire derived fuel. Standard stoker boilers, a traveling grate and dry gas scrubbers with a high pressure extraction turbine are used in the facility. The plant is operated by approximately 30 full time employees under the management of a limited partnership of which an affiliate of Tondu is co-general partner.
As the first major co-generation power plant in Michigan to receive Qualifying Facility status under federal regulations, contested Michigan Public Service Commission rate hearings for the Filer City Project were required to approve the electricity rates proposed in its power purchase agreement. These hearings resulted in setting a favorable precedent for electricity rates of Qualifying Facilities in Michigan. In addition to leading the defense of these hearings, Tondu organized a lobbying effort and actively supported the successful enactment of state legislation to encourage the development of independent power plants in Michigan. Based on the success of these rate hearings and the promulgation of the supporting state legislation, over 1,400 MW of new Qualifying Facilities at a cost exceeding $600 million were subsequently developed in Michigan.
Development Responsibilities
Tondu identified the project and was responsible for negotiating all of the project contracts including the site acquisition agreement, coal dock lease, steam sale agreement, power purchase agreement, coal purchase agreement, power interconnection agreement, and the financing documentation. In addition, Tondu obtained the required environmental permits and actively participated in the project’s construction management.
Ownership and Management
The Filer City Plant is owned by T.E.S. Filer City Station Limited Partnership. A Tondu affiliate owns approximately 40% of the Filer City Project and, as co-general partner, is jointly responsible with the other major equity owner for the plant’s continued operation and maintenance.
The Williams Lake Power Plant is a 60 MW wood waste fueled electricity generating plant which consumes approximately 600,000 green tons of bark, sawdust and other wood waste products per year. The wood waste fuel is provided by five surrounding sawmill operations which collectively process over one billion board feet of lumber per year.
Electricity from the Williams Lake Power Plant is sold under a 25-year electricity purchase agreement to The British Columbia Hydro and Power Authority.
Tondu led the effort to secure financing and closed the Cdn. $135 million non-recourse debt and Cdn. $15 million equity financing on May 2, 1991. The debt was provided by a group of Canadian insurance companies and pension funds with a fixed interest rate and a 22-year term. When the Williams Lake Project financing was completed in 1991, it was the largest independent power plant financing ever completed in Canada and second largest non-recourse financing in Canadian history. It was also the first Canadian non-recourse transaction funded by financial institutions prior to the completion of construction.
From the beginning of commercial operations in April, 1993 until Tondu sold its interest in the Williams Lake Plant in August, 1997, the plant exceeded performance expectations.
The Williams Lake Power Plant is fueled with 100% wood waste and uses standard water wall boilers with a hydrograte fuel feed system. Particulate emissions are controlled by an electrostatic precipitator. Electricity is generated by a full condensing high pressure steam turbine.
Tondu identified the project and led the negotiations for the principal contracts including the power purchase agreement, the turnkey construction contract and the project financing. Tondu also managed the engineering and construction of the project as well as the development of the operation and maintenance organization including staffing, training and the plant policies and procedures.
Tondu controlled 33% and through affiliates owned 25% of the equity in the Williams Lake Power Plant until August, 1997 when our interest in the project was sold to BC Gas. BC Gas was one of the investment partners Tondu brought into the project.
