Pratt Energy presented their case for an economic development exemption to the Pratt County Commissioners Monday.
Pratt Energy is asking for a 50 percent exemption on $20 million invested in the purchase of the plant and for upgrades to the plant over a period of 10 years, said Shelia Lenagh, director of tax for Scoular and Pratt Energy.
Lenagh researched seven other ethanol plants in Kansas and offered comparisons on their individual exemptions including some plants that received a 100 percent exemption for 10 years.
The exemption would be on the $10 million Pratt Energy invested in upgrades for the plant after it was purchased. The exemption would not cover any of the purchase price.
For some time, the amount of the exemption was thought to be for $18 million but Lenagh said that was incorrect. Upgrades to the plant cost $10 million and the other $8 million was working capital that is not part of the exemption, Lenagh said.
Commissioners did not vote on this item at the Monday meeting. Further information will be gathered before a decision is made.
A public hearing on the exemption will be held on the exemption at 5 p.m. on Monday, Feb. 10 in the county commission room on the first floor of the Pratt County Courthouse. If more people attend the meeting than the room can hold, the meeting will move upstairs to the courtroom.
The commissioners have options such as a reducing scale, on the exemption and do not have to give the full 10 years requested although they could choose to do that as well.
Of the $10 million in improvements, $2 million went to improving fermentation, $3.5 million to distillation, $1.5 million on two boilers and the cooling tower, $2 million on distiller's grain conveyors and $1 million on oil extraction, Lenagh said.
When Pratt Energy took over the plant in 2013 it was not in operating order and these upgrades were necessary to get the plant in operation.
President of Pratt Energy Lyle Schlyer said the plant is committed to producing ethanol and using as much local grain as possible. He projected the plant would use 9.7 million bushels of corn and 1.7 million bushels of milo over the next five years.
Purchasing that amount of grain creates a more competitive market for producers in the county.
"I don't see a time when we won't be consuming both," Schlyer said.
Schlyer said he anticipated unknown problems getting the plant to a point it could produce ethanol and he wasn't disappointed.
Now that the plant is producing ethanol, other challenges lie ahead. The government's push for E 10 instead of E 15 will reduce the demand for ethanol.
That could produce too much capacity in the industry and that could idle some ethanol plants but his goal is to keep the Pratt plant in operation.
"We don't want the Pratt, Kansas plant to be idle," Schlyer said
Looking ahead, Pratt Energy is considering using a portion of the $8 million working capital towards electric generation equipment so they can produce their own power.
They are also considering adding grain storage facilities to bring the plant up to 11 million bushel on site.
In other activity, the commissioners signed a letter that will be sent to Sen. Mitch Holmes and Rep. Marshall Christmann reminding them of job retention at Kansas Department of Wildlife, Parks and Tourism.
Administrator of Emergency and Medical Services for Pratt County Mark McManaman presented a memorandum between Pratt County 911 and Kansas 911 Coordination Council who will work together to upgrade the emergency reporting system. It did not require a commission vote.