Detroit Renewable Energy LLC – Q3 Review 2011
Steven White, Chairman
Detroit Renewable Energy LLC – Q2 Review 2011
Steven White, Chairman
Detroit Renewable Energy LLC (“DRE”) is committed to providing the City of Detroit and surrounding municipalities with safe, reliable and cost-effective solutions for clean energy and waste disposal. DRE owns a group of assets critical to the supply and distribution of renewable energy: (i) Detroit Thermal, LLC (“Detroit Thermal”), a district energy business that provides efficient heat to most of the buildings in downtown Detroit and the Woodward Avenue corridor; (ii) Detroit Renewable Power LLC (“DRP”), an energy-from-waste facility that processes and combusts municipal solid waste into electricity and steam that is sold to Detroit Thermal; and (iii) Hamtramck Energy Services, which provides operating and maintenance services to several GM plants. DRE was formed in November 2010.
At this point, we have experienced elements of both the challenge and the opportunity embodied in the DRE investment. As we have brought the DRP facility to longer stretches of improved operability, we have seen evidence of the efficiencies and financial performance that can provide DRE with attractive, long-term returns. On the other hand, while significant progress has been made, the DRP facility will continue to consume capital as our management team puts in place the necessary capital improvements. We understood the magnitude of deferred maintenance at the DRP facility at the point of acquisition. Restoring and operating the facility at the standards necessary for success remains the challenge ahead of us.
We are proud to announce that Detroit Thermal was recognized for its business development activities at the 102nd International District Energy Association conference held in Toronto, Canada, receiving a Bronze award for the volume of additional square feet commitments achieved by Detroit Thermal in 2011. Congratulations to the team at Detroit Thermal, as we placed ahead of more than 200 other district energy systems.
Last but most importantly, we made significant progress in regard to employee safety during the quarter. In Q2, DRE’s recordable incident rate dropped to 2.72 from the 3.76 realized in Q1. Our managers continue to emphasize the Atlas safety culture as we strive to achieve world-class safety performance.
Detroit Renewable Energy LLC – Q1 Review 2011
Steven White, Chairman
Detroit Renewable Energy LLC (“DRE”) owns a group of assets critical to the supply and distribution of renewable energy, as well as the management of solid waste, in the City of Detroit. The operating units of DRE are (i) Detroit Thermal, LLC (“DT”), a district energy business that provides efficient heat to most of the buildings in the Detroit central core; (ii) Detroit Renewable Power LLC (“DRP”), an EFW (energy-from-waste) facility that processes and combusts up to 3,300 tons per day of municipal solid waste (including most of the solid waste generated in Detroit), the heat value of which is used to produce electricity that is sold to the local utility and steam that is sold to DT; and (iii) Hamtramck Energy Services (“HES”), which provides operating and maintenance services to several GM plants, primarily in the Detroit area. DRE was formed through the simultaneous acquisitions of DT, the Greater Detroit Resource Recovery Facility, and other related assets in November 2010.
The complexity of the transaction, which required us to manage and resolve environmental, operational, technical, political and union issues, provided a pathway to purchase the subject assets, notwithstanding the appetite of many institutional investors for infrastructure businesses. We believe that the linkage of the DRE businesses under common ownership, together with our commitment to revitalize the assets, creates an opportunity to build significant long-term value. DRE is committed to providing the City of Detroit and surrounding municipalities with safe, reliable and cost-effective solutions for clean energy and waste disposal, utilizing its essential infrastructure assets.
Upon consummation of the complex set of transactions that formed DRE, our team of Operating Partners and managers hit the ground running. Steve White joined us as Chairman of the Board of DRE in November. Steve is a former Managing Director of Morgan Stanley and co-head of its infrastructure finance group, having led approximately $1 billion of financings for the Detroit municipality. His credibility and familiarity with multiple constituencies in Detroit already has been very helpful to DRE. In November, we also added key members to the management team, including Paul Maier, who is serving as President of DRP, and Jim Royce, who joined us as CFO for DRE. Both Paul and Jim have worked closely with us in the past as members of the senior management team of former Atlas portfolio company Michigan Seamless Tube. We have confidence in their capabilities and we are excited that they have joined us in these senior roles.
On the business development front, DRE has begun to systematically analyze every building in downtown Detroit that could be served by the DT steam loop as a means of beginning a targeted campaign to bring new customers onto the system. In addition, the leadership team at HES had a very busy quarter, securing new business at additional GM facilities, which will grow revenue. And DRE’s community outreach program got into full swing in Q1 as DRE leadership met with many of DT’s customers and other members of the Detroit community.
