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Kimberly-Clark buys generating equipment from PUD for $26.5M

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By Bill Sheets
Herald Writer
EVERETT -- Snohomish County's main electricity provider is due to receive money Monday from Kimberly-Clark as a result of the planned closure of the wood products plant, and there could be more.
Kimberly-Clark was scheduled Monday to wire the Snohomish County PUD $26.5 million as compensation for energy-generation equipment, which the utility installed at the plant in the 1990s and Kimberly-Clark will keep, PUD spokesman Neil Neroutsos said.
The PUD paid $115 million to install the equipment, which began operating in 1997, he said.
The facility consists primarily of a boiler and a turbine. Wood waste was burned in the boiler and the resulting steam powered a turbine. The plant generated an average of 27 kilowatts at a time, enough to power about 20,000 homes, or slightly less than 3 percent of the PUD's power needs, Neroutsos said.
The PUD leased space for the equipment at the plant on the Everett waterfront for about $100,000 a year, and Kimberly-Clark leased other equipment from the PUD for a nominal fee, Neroutsos said.
The $26.5 million payment "was a negotiated figure that we arrived at with the PUD," Kimberly-Clark spokesman Bob Brand said from the multinational corporation's office in Dallas.
"There were obligations on both sides and costs on both sides and we tried to figure out what that would look like if the contract had run its full course," Brand said. The contract between the two parties was due to expire in 2016, he said.
Kimberly-Clark announced in January that it was closing the last of its pulp operations, including the Everett plant. The plant will be closed by the end of the year if no buyer is found, Brand said.
Atlas Holdings, which owns a pulp-and-paper mill in Glen Falls, N.Y., has expressed interest and continues to negotiate a possible purchase from Kimberly-Clark, according to Brand. Most of the Everett plant's 750 employees have been notified they could be laid off before the end of the year.
Coming to a resolution on the energy facility could help prospects for a sale, Brand added.
In addition to the cash payment, the PUD also stands to receive a net percentage of the proceeds if Kimberly-Clark sells the equipment, Neroutsos said. The amount depends on factors such as how much time passes before any sale takes place, he said.
While the facility generated enough power to make a difference in the energy supply, it under-performed compared to its original expectations, Neroutsos said. The forecast output was 37.5 kilowatts, enough to power about 28,000 homes, compared to the 20,000 result.
The parties agreed to shut down the generating plant Sept. 30.
The loss of the power source is not expected to be a problem for the PUD, Neroutsos said.
"There may be times in the year when we have peak demand and we might have to buy additional power but we don't expect it to be significant," he said.

Bill Sheets: 425-339-3439;
Story tags » Kimberly-ClarkPaper ProductsAlternative EnergyPUD

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