Coal Plant Repurpose

In late February 2017, Duke Energy (DUK:  NYSE) completed the sale of the Walter C. Beckjord coal-fired power plant in Clermont County, Ohio.  American Electric Power (AEP:  NYSE) and Dayton Power & Light were partners in Beckjord, which was originally building in the early 1950s.  In 1972, four oil-fired units were added to Beckjord, bring total nameplate capacity to 1.4 gigawatts.  The power plant operated consistently to 2014, when the economics of coal cause Duke and its partners to decide a shutdown.   

Commercial Liability Partners, LLC is the lucky buyer of Beckjord.  CLP specializes in unwanted and cast-off commercial property that is unlikely to attract a buyer in the open market.  CLP is multi-talented in decommissioning, site demolition, abatement and remediation.  For example, CLP is turning the Muskingum River Power Plant in Ohio that once belonged to AEP into an industrial park for technology ventures.  The rest will revert to farmland and a wildlife preserve.  CLP deploys a patent-pending remediation solution for coal ash ponds it calls the Sustainable Habitat capping system.

CLPs work on the Muskingum power plant provides a good view on the how CLP handles a job that most would consider impossible.  Muskingum was also a coal-fired plant that had been built in the 1950s on 1,500 acres.  After a failed plan to cover it to natural gas, in 2015 AEP sold Muskingum to CLP and slipped out from any liability for the site.  CLP managed its risk by assembling a clutch of contractors good at demolition and remediation of 200 acres of ash ponds.  Then CLP set up carefully orchestrated local events and communication networks to explain how plans for the site could benefit the community.  Local officials are already confident the project will result in higher tax collections.

Resistance to a shift from coal-fired power plant to renewable power is often accompanied predictions of dire economic fallout.  The coal industry buys bill boards attacking the Environmental Protection Agency, calling “Job Killing EPA” and declaring Ohio and other places as “No Job Zone.”  Yet it seems clear when handled properly a closed down coal-fired plant may actually open the door to new opportunity.  When Muskingum was closed down, it eliminated 62 jobs.  However, CLP’s reclamation work has created a number of skilled jobs and the industrial park site promises host any number of new technology positions.  The number of jobs may yet be unknown, but there is already certainty in improved air and water quality.

Now CLP is embarking on another renaissance project at Beckjord.  Besides a keen understanding of the work that has to be done to repurpose the Beckjord property, CLP brings innovation to financing its projects.  They call it the VCI DIVEST system, encompassing Valuation, Collateralization and Execution steps.  As coal-fired power plants close their doors it is likely CLP’s phone will ring again and again.  Investors with a palate for privately held companies might be well served by watching CLP for an opportunity to participate in its own financing or financings associated with its projects.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.