Sept. 27, 2004: Acquisition of
Fulton Cogeneration Power Plant Announced
SAN FRANCISCO, Calif.–
Lion Capital Management Group (LCM), its partner Fimab and Promeneur
& Hausmann, Inc. and El Paso Merchant Energy North America Company
jointly announced that they have reached a definitive agreement
for LCM to own and operate the Fulton Cogeneration Association,
L.P. (FCA), a subsidiary of El Paso Power Merchant of Houston, Texas.
Last August, the United States Federal Energy
Regulatory Commission issued an order authorizing disposition of
jurisdictional facilities to El Paso Merchant Energy-Petroleum Company,
Rensselaer Plant Holdco, Fulton Cogeneration Associates, Lion Capital
Management, Fimab and Promeneur & Hausmann, Inc. which stated,
“The proposed transactions are consistent with the public
interest and are hereby authorized.” Also in the same month,
the United States Federal Communications Commission consented to
the transfers of control of the wireless telecommunication license
WNVZ 562 from Coastal Technology Inc. to FCA. This asserts that
FCA now meets the requirement of a small telephone company as set
out by the FCC rule.
The cogeneration plant is a 45-megawatt,
natural gas-fired, combined-cycle power plant facility located in
Fulton. The plant has been in operation since June 1991 and is located
on approximately 1.2 acres. Currently, the plant is dispatched as
a merchant facility by El Paso, selling its output into the NYISO
Central Zone via an interconnection to Niagara Mohawk Power Corporation.
The plant is specialized in producing electricity
and steam for businesses around Oswego County. The plant was also
granted a license on March 15, 1991, by the National Energy Board
of Canada to export between 170,000 per day or 62,000,000 per year
cubic meters of natural gas to Calgary in Alberta, Canada. This
license is extended until Oct. 31, 2005.
“I can say without reservation that
this is truly a unique deal—something no one has ever done
before in our industry. Being able to bring not only a consortium
of cocoa producers as direct investors to the business of manufacturing
fine chocolate with the already trained labor available at the oldest
milk chocolate manufacturing plant in North America, but also acquire
a major power plant in the region, is truly the dream of every manufacturer,”
said Dr. Ousmann-Alain Gbané, principal and chief investment
officer of LCM.
Of all the moves Lion Capital Management
Group made within the last few months, the latest may be the most
pivotal to the success of its investment in the chocolate manufacturing
plant.
“The sale of the cogeneration facility
to Lion Capital Management Group, parent company of New York Chocolate
& Confections Company may become very beneficial to the city
of Fulton if the company decides to produce electricity. If they
produce electricity, it would help our water situation. In order
to produce electricity, the cogeneration plant would have to use
150 million gallons of water annually. When you just produce steam,
you use just a little more water but it’s not a substantial
amount. If you produce electricity, then you use about 150 million
gallons a year. The company is looking for avenues for electricity
right now," said City of Fulton Mayor Daryl Hayden.
The cogeneration plant was originally installed
in late 1990 to produce electricity with a $48,500,000 County of
Oswego Industrial Development Agency bond currently held by a subsidiary
of Lion Capital Management Group as a result of this transaction
with a balance of $18,700,000.
Prior to July 1998, FCA operated under a
baseload contract selling energy and capacity directly to Niagara
Mohawk Power Corporation. In July 1998, the project’s off
take arrangements were restructured, and the obligation to sell
power to NIMO was terminated. After the agreement was dropped, it
was not advantageous for FCA to produce electricity since the company
had to negotiate the price per kilowatt and Niagara Mohawk could
have paid them two or three cents per kilowatt. FCA gets called
upon for voltage support by the NYISO and receives compensation
for this ancillary service when it is provided.
“We intend to bring our global expertise
and innovation to this business while El Paso will be around for
a little while as a consultant to our newly owned company. This
will enable us to better serve existing customers and attract other
world-class customers in the region, thus, creating opportunities
for families in Central New York. I am confident that today marks
the beginning of the next chapter of another 100-year partnership
in the region," said Dr. Gbané.
The purchase of the cogeneration facility
will not only allow the New York Chocolate & Confections Company
to use steam in running the former Nestlé facility, but also
could potentially benefit other manufacturing plants and hospitals
in the area. As evident, Lion Capital Management Group and Northeast
Biofuels have discussed interest in working with FCA to provide
steam to the ethanol production facility being proposed for the
Riverview Business Park and a portion of the former Miller Brewing
plant.
This venture would allow Northeast Biofuels
to reduce the cost of its energy that it forecasts for the ethanol
project which will commence in the fourth quarter of 2005. In a
letter to Lion Capital Management, Northeast Biofuels Chief Financial
Officer J. Michael Hadley wrote, “we have a very high level
interest in pursuing the potential of entering into a mutually agreeable
business arrangement with your organization for its supply of steam
and power to our ethanol project.”
According to L. Michael Treadwell, executive
director of Operation Oswego County, the acquisition of the FCA
facility was always an integral component of the overall redevelopment
plan for the former Nestle facility.
“The involvement of Lion Capital Management
Group in this project helps strengthen the long-term development
of New York Chocolate & Confections Company in Fulton. Also,
the potential of business relations with other current and prospective
employers, such as Northeast Biofuels, is a tremendous asset for
growing the local economy,” Treadwell said.
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