East Texas

By BETTY WATERS
Staff Writer

HENDERSON -- Plans and financing are being finalized for construction just outside Henderson's northern city limits of a $160 million electric power generating plant fueled by recycled wood, such as wood chips and discards from area sawmills normally disposed of in landfills.

Although natural gas and various types of coal commonly fuel power plants, use of recycled wood byproducts is an economical way to do it in a forested area, observed Andrea Morrow, spokeswoman for the Texas Commission on Environ-mental Quality.

The process is called biomass technology and the proposed plant is a "green project," meaning emissions are not an issue on the environment, officials said. Only a couple of biomass power plants have been built in the state in recent memory, one in the Nacogdoches area and the other in Angelina County, Ms. Morrow said.

SunMark Energy LLC, a Dallas-based company specializing in developing and operating clean technology energy plants throughout North America, anticipates building the plant near Henderson on approximately 100 acres of land the company plans to purchase in Rusk County, according to President Mark Engeberg.

SunMark expects to start construction next year and have the facility running in about three years, possibly in late 2011 or 2012. The project will involve approximately 200 construction workers. Once the plant begins operating, it will have about 60 full-time employees on three shifts in a range of jobs, including the general manager, chemists and environmentalists.

The 60-megawatt plant would generate enough electricity, that SunMark could sell under long-term contracts, to supply 40,000 homes. According to the company president, SunMark will sell the electricity to a market participant -- still to be determined -- in the Electric Reliability Council of Texas, a corporation formed in 1970 that administers the power grid for Texas.

To help finance the plant, Henderson Economic Development Corporation's board of directors unanimously approved Monday a $130 million bond issue, the largest in HEDCO's history, to be carried out next spring. But HEDCO will have no responsibility for paying off the bonds, which will be issued in SunMark's name.

Of that sum, at least $50 million will be low-interest, tax-exempt solid waste disposal bonds and about $80 million in taxable bonds. Another $35 million from private investors outside Rusk County has already been put into the project.

"I would like to stress that on this project, HEDCO is acting as a conduit in facilitating the issuance of these bonds. HEDCO, however, is not under any obligation -- we have no liability in this project. We are spending zero money on this project. We are only facilitating the bonds so they (SunMark) can be eligible for the tax exempt bonds," said Sue Henderson, HEDCO's general manager.

SunMark will bear responsibility for paying off the principal and interest on the bonds.

Ms. Henderson said, "I applaud our board for taking this step. � This project will boost local development, help move Henderson into the 'new economy,' help reduce our dependence on foreign oil and conserve valuable resources. And, the plant will use wood chips and other wood materials and pay for these local resources that otherwise would be wasted."

Board President W. R. Sears said, "SunMark assumes the risks and the city is protected from possible liabilities. That's one of the things that made this decision easy."

"We're grateful the board acted promptly so we can focus on next steps," Engeberg said. "We've worked hard to put this project together and are just crossing the start line. It's a strong start, but many hurdles remain. We look forward to working with everyone involved as part of the Henderson and Rusk County community so we can cross the finish line and benefit together."

SunMark must obtain appropriate permits from the Texas Commission on Environmental Quality and other permits before construction can begin. Typically, power plants need state and federal NSR (new source review) permits, a federal operating Title 5 permit and possibly storm water and waste disposal permits, according to the TCEQ spokesperson.

Also, SunMark and the city of Henderson will need to complete negotiations on a contract for SunMark to purchase 1 1/2 million gallons of water daily from the city for use in the power plant.

"We are going to sell to SunMark our effluent (waste) water, which is an absolutely wonderful benefit to Henderson, because we are generating revenue for water that currently is going down the creek. That is another advantage for Henderson," Ms. Henderson said.

To fuel the plant, SunMark will purchase wood byproducts from area vendors, such as wood chips, bark and other discards from local sawmills and similar wood processors that normally would be disposed in landfills or left to deteriorate and create fire hazards, officials said. They estimated the plant will use about 400,000 tons per year of "trash wood" while generating "clean, non-fossil energy."

According to a company statement, SunMark expects to receive special state payments for diverting trash wood from landfills and may receive federal renewal-energy-production tax credits, which were recently extended by the Emergency Economic Stabilization Act signed by President Bush on Oct. 3.

Considering the benefits to Henderson/Rusk County, the project is "a good deal," Ms. Henderson said. "I'm very pleased and very hopeful this will go through quickly."

Mike Byrd, senior vice president of First Southwest Company and financial adviser to HEDCO, said, "We believe this is a major opportunity for Henderson and the county and should progress quickly once the financial markets start to settle down. The project appears well thought out and has plenty of lead time for that to happen."

Ms. Henderson and Engeberg have been negotiating for more than a year. The negotiations started as SunMark was scouting possible locations in Texas to put the new power plant.

"I told (the company president) we have everything you need," Ms. Henderson said. She showed him around, introduced him and he liked what he saw, she added.

"There's been a lot of work involved in making this happen," she said.