Contractor Demolishing Power Plants Will Pay City $1.2 Million for Scrap Metal

McIntosh 3

In a case of good timing, the city of Lakeland needs somebody to demolish three shuttered power plants at a time when prices for recycled scrap metal have been rising. As a result, the city will net $1.2 million under a pending contract to raze and remove three shuttered Lakeland Electric plants on Lake Parker.

The city-owned utility got eight responses when it solicited bids from companies to essentiality remove the power plants in exchange for salvaging and selling scrap metal extracted from the site. On Monday, the Lakeland City Commission is expected to approve the utility’s recommendation to award the demolition contract to Total Wrecking & Environmental LLC of Tonawanda, N.Y.

It’s a global bull market for ferrous metals, with recycled scrap selling for $703 a ton in March, a 34.7-percent increase in the last 15 months, according to Pittsburgh-based Management Science Associates Inc.’s Raw Material Data Aggregation Service.

Lakeland Electric just happens to have many tons of scrap ferrous metals that it needs to get rid of by late 2023 when it plans to build a new power plant on its 530-acre site on the eastern shore of Lake Parker that currently houses McIntosh units 1, 2 and 3.

Under the proposed agreement, Total Wrecking will pay the city $50 for each ton of scrap metal removed from the site, an estimated $1.222 million. The project will begin in May and end in November 2023.

The proposed contract with Total Wrecking is one of two utility items on the agenda for Monday’s commission meeting, which begins 9 a.m. in City Hall, 228 S. Massachusetts Ave.

“The good news is this agreement is zero cost to the city,” Assistant City Attorney Ramona Sirianni told commissioners at Friday’s agenda study meeting. “This agreement will actually generate revenue.”

In December 2020, Lakeland Electric, Florida’s third-largest public power utility, announced it was closing its coal-fired power plant, McIntosh Unit 3, three years earlier than previously planned. 

McIntosh Unit 3 (September 2018)

The unit, capable of producing 360 megawatts of the electricity and operational since 1982, was 60% owned by Lakeland Electric and 40% owned by the Orlando Utilities Commission. 

Decommissioning Unit 3 three years early would save the city $13.1 million, the utility estimated. Unit 3 officially shut down on April 4, 2021, going cold iron along with units 1 and 2.

Unit 1, a natural gas/oil-fired steam turbine with 85-90 megawatt output, came online in 1971 and was shut down on Dec. 31, 2015.

Unit 2, a 125-megawatt natural-gas steam-fired boiler, entered service in 1976 and was retired in April 2020.

Under Lakeland Electric’s “next gen” plan, it will replace the three McIntosh units with five gas-powered internal combustion engines that will go online sometime in 2024.

Germany-based MAN Energy Solutions plans to build a new 120-megawatt RICE (Reciprocating Internal Combustion Engine) plant to replace the coal-fired Unit 3 by 2024. It will begin the installation once demolition is complete, no later than November 2023.

In the interim, Lakeland Electric has a $23.4 million deal with Orlando Utilities Commission to provide electricity to the city until the new generators come online in 2024.

Under the proposed agreement with Total Wrecking, “The city shall transfer title to scrap metals and assets derived from the work to the contractor.”  

In exchange, the contract says, “Contractor agrees to fully perform the work of this contract and pay to the city a total sum of $1,222,122.. Contractor shall make monthly payments to the city in an amount equal to $50 for each gross ton of scrap metal removed from the project site, regardless of metal type.”

Commissioners raised few issues with the proposed agreement Friday, although Commissioner Mike Musick requested language in the contract that would restrict Total Wrecking’s capacity to submit change orders and  contract amendments in case “they find something hidden” on the site that dramatically increases costs.