Downtown facility changing hands

November 21, 2008
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Kent County will sell the District Heating and Cooling Operation, along with 7.5 miles of underground pipeline, to Veolia Energy Grand Rapids LLC for $2.4 million. The system provides heating and cooling service to 135 customers in the Central Business District. The county has owned and operated the downtown service since 1990.

County commissioners approved the sale last week. Closing is expected to take place by Wednesday. The county’s Finance Committee agreed to the asset sale last month.

Veolia Energy Grand Rapids is a division of Veolia Energy North America, which is a subsidiary of European conglomerate and Paris-based Veolia Entertainment.

“We believe they will be able to move the business forward,” said Bill Allen, director of the county’s Waste-to-Energy operation.

“The new owner will assume those after the sale,” said Allen of the existing customer contracts.

Veolia Energy Grand Rapids suggested the purchase price of $2.4 million. The firm plans to retain the current employees and has deposited $240,000 into an escrow account that the county Board of Public Works can access until the sale actually does close.

“This has been a long and tedious process. It was not a snap decision. A lot of thought went into it,” said County Commissioner Gary Rolls.

Grand Rapids city commissioners granted Veolia Energy Grand Rapids a 30-year, non-exclusive franchise agreement six weeks ago. The 45-day waiting period for that contract ended on Nov. 21 and closing of the sale had to wait until that period ended.

The franchise agreement caps rate hikes to the Consumer Price Index and limits the firm to requesting an increase once every two years.

Veolia Energy Grand Rapids chose to be regulated by the city instead of the state’s Public Service Commission.

The DHCO is located at 156 W. Fulton St., on the southeast corner of Fulton Street and Market Avenue. The operation uses four industrial-sized boilers to heat and cool buildings. The boilers can burn natural gas or low-sulfur fuel oil and have a capacity output of 450,000 pounds-per-hour. Roughly 260,000 pounds-per-hour are needed to meet the system’s peak-heating demand.

Allen said the county’s Waste-to-Energy facility will continue to produce electricity and sell the power to Consumers Energy.

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