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WEB to Provide for Ethanol Plant: Energy Company to Pay for Expansion

Posted on: Tuesday, 11 April 2006, 06:00 CDT

By Scott Waltman, American News, Aberdeen, S.D.

Apr. 11--WEB Water Development Association will provide 100 million gallons of water per year to a planned ethanol plant west of Aberdeen provided plant developers pay for WEB's associated expansion costs.

The WEB Board of Directors Monday passed a measure 7-1 to provide the water with that stipulation.

Glacial Lakes Energy of Watertown is planning to build an ethanol plant between Aberdeen and Ipswich. The estimated cost is $140 million.

In a press release, WEB Board Chairman Orland Geigle of Pollock said WEB is not interested in borrowing funds to cover the cost of the expansion and, as a result, increasing the debt and risk for existing customers. He said WEB supports ethanol development and already provides water for three plants, but doesn't want to borrow millions of dollars to largely benefit the ethanol industry.

WEB estimates it would cost Glacial Lakes $6.4 million to expand the WEB treatment plant near Mobridge and another $2 million to install pipe and a pump station on the main line between Bowdle and Mina.

Curt Hohn, WEB Board manager, said WEB has water capacity available to cover the needs of existing customers for the next decade without expanding its treatment plant.

"The developers of this ethanol plant and other plants have access to the resources needed to pay for the cost of treatment plant expansion and main line expansion that will be needed to serve the ethanol industry," Hohn said.

State lawmakers approved legislation that exempts ethanol and power plants from paying the 2 percent contractors' excise tax and 4 percent sales tax. "The 6 percent tax savings amounts to a $12 million grant for investors and developers of this ethanol plant and another (Glacial Lakes plant) being built near Redfield and should be more than enough to cover the cost of water system improvements that will be needed to provide water to their ethanol plants," Hohn said.

WEB Vice Chairman Paul Fischbach of Mansfield echoed Hohn's comments. A farmer, Fischbach said it doesn't make sense to saddle WEB members with more debt while ethanol investors are seeing 20 to 25 percent returns on their investments.

Hohn said that industrial users who sign up for WEB water service in the future could pay a pro-rated share of the potential Glacial Lake expansion costs.

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Copyright (c) 2006, American News, Aberdeen, S.D.

Distributed by Knight Ridder/Tribune Business News.

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Source: American News (Aberdeen, S.D.)

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