Published: November 27, 2007 09:39 pm      

State EDA will be on $3 million hook if Western Greenbrier Co-generation plant isn’t built

The West Virginia Economic Development Authority is on the hook for $3 million if a proposed $400 million clean coal power plant in Greenbrier County does not get built.

Western Greenbrier Co-Generation ran into financial trouble when its efforts to refinance a $4.87 million loan with First National Bank of Ronceverte fell through, the Associated Press reported last week.

The Economic Development Authority — the state’s financing agency for development projects — had guaranteed $3 million of the loan, said David Warner, the authority’s executive director. First National had decided not to extend the loan, he said, and Summit Community Bank had agreed to do so. Warner said that during its Oct. 18 meeting the authority’s board of directors approved the same loan guarantee for Summit Community Bank.

“Western Greenbrier Co-Generation was not able to meet all of the conditions to close the loan with Summit,” Warner said. “So our guarantee to Summit was never put in place. Thus, we have received a claim for our loan guarantee from First National Bank of Ronceverte. We are currently processing a claim for the full $3 million.”

Warner said the Economic Development Authority had been watching the Western Greenbrier Co-Generation project closely. “The project still had to perform,” he said. “Project costs kept escalating, especially the cost of materials. What was a $250 million project became closer to a $450 million project.

“You can only issue ‘X’ amount of bonds at a certain interest rate and be able to pay it back with the revenue of an electric generating plant. It became harder to find additional investor resources when it became harder to issue enough debt to build the entire facility.

“It is still possible, and we are hoping there is a company or an entity that can step in and give them the opportunity to keep putting these things in place,” Warner said. “The project is not necessarily dead — the underlying financing has just run out.”

The federal Department of Energy had agreed to invest $5 million in the project to help pay for engineering and feasibility studies but required a $5 million local match. The local match was the loan from First National Bank of Ronceverte. The Economic Development Authority, Federal Home Loan Bank of Pittsburgh and an engineering firm guaranteed the loan.

“The engineering and feasibility studies were completed,” Warner said. “But in the time it took to do that, project costs escalated and it’s tougher to put a successful financing package in place. Not impossible, just more difficult in today’s environment.”

Gary Skidmore, president of Western Greenbrier Co-Generation, told the Associated Press last week that if the company can keep the project going until spring, when it hopes to issue $300 million in bonds, the creditors would be paid with proceeds from the bond sale.

“We would get paid with the proceeds from the bonds,” Warner said Monday.

The Greenbrier County communities of Rainelle, Quinwood and Rupert own Western Greenbrier Co-Generation. The planned 98-megawatt electric power plant would burn coal waste, or gob, for fuel.