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Oxford Energy Co. and Bethlehem Steel Corp. have executed a letter of intent under which an Oxford subsidiary will purchase and upgrade the power station at Bethlehem's Lackawanna plant.

Oxford is expected to spend between $70 million and $80 million on the project, including the acquisition cost, which was not disclosed, the company said.

The project is separate from the 30-megawatt tire-to-energy plant Oxford wants to build in the same area.

The Bethlehem power plant uses gas from coke ovens to generate about 22.5 megawatts of electricity. The Oxford subsidiary, Lackawanna Cogeneration Associates, plans to modernize the facility and install a 49-megawatt gas-fired co-generation facility that together would produce up to 71 megawatts of power to be sold to Niagara Mohawk Power Corp. Coke gas and steam would be purchased from Bethlehem.

The deal is subject to approval by both the Oxford and Bethlehem boards of directors and by regulatory agencies. Oxford said the project could be operational by early 1992.

Meanwhile, Lackawanna Mayor Thomas E. Radich said he welcomes the 3-2 vote by the City Council on Dec. 3 to support the Oxford tires-to-energy plant if all conditions can be met.

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