Toyota, Ares partner in gas power plant near New Carlisle

Long-delayed plans to build a natural gas power plant near New Carlisle have new momentum, with groundbreaking expected for late winter or early spring, a developer has told St. Joseph County officials.

Toyota Group and Ares Private Equity Group are partnering to build and operate St. Joseph Energy Center LLC, a plant that will rise at the northwest corner of Walnut and Edison roads, about a mile and a half east of the town.

The project’s original developer, White Plains, N.Y.-based Development Partners Group LLC, announced in March 2011 plans to build a $700 million plant there, with completion expected in 2014. That didn't happen because obtaining permits has taken longer than expected, especially approval from PJM Interconnection, a company that coordinates movement of wholesale electricity, to hook the plant into the electric grid, said Development Partners’ Willard Ladd. He's now working with St. Joseph Energy to move the project forward.

The Indiana Department of Environmental Management has issued the plant air quality and wastewater discharge permits.

Ladd said it will take about two and a half years to build the $500 million plant, creating about 500 construction jobs along the way. Contractors are working with local labor unions when possible.

When it becomes operational in June 2018, the plant will employ 20 people in high-skilled operator and technician jobs, earning average salaries of $95,000, he said.

If the plant does well, the company will build a second identical plant at the site, bringing the total investment to $1 billion and employing 20 more people at those salaries.

The company plans to seek a property tax abatement from county officials in the next few months, and will ask the county to issue $34 million in bonds to help raise capital, at no risk to the county, Ladd told the county council Tuesday night.

It’s not the first time a power plant has been proposed for the site. In 2000 Allegheny Energy Supply started building a natural gas power plant there, spending $24 million on concrete infrastructure before abandoning the project when natural gas prices spiked. The site has since been cleared.

In 2008, Tondu proposed a coal gasification plant there but county officials refused to approve it in the face of heavy public opposition.

Each phase of the new plant will contain two turbines that generate electricity with steam created from compressed air and burned natural gas. The gas will be delivered to the site via an existing underground pipeline, coming from Canada, the West and the Gulf of Mexico, Ladd said. St. Joseph Energy will sell the electricity through the grid, using an existing nearby American Electric Power substation.

The plant will discharge wastewater into a nearby ditch and through sewers to South Bend's wastewater treatment plant. New wells will supply the plant with up to 5 million gallons of water per day.

Ladd said he has developed 18 natural gas power plants across the United States.

Two trends are driving the need for the project, Ladd said. Natural gas prices are at historic lows because of increased supply from new shale mining advances throughout North America. Even if that changes, environmental regulations will continue to drive up costs of operating coal-burning power plants, allowing natural gas plants to beat them on price, he said.

“We’re excited to be moving forward on the project,” Ladd said.