The Board of Light and Power is proceeding with plans for a power complex on harbor island. The community has had little say in this. We are urgently asking for a qualified independent look at their plans.
The $45 Million Bond Issue for the BLP's Proposed Project
Do Grand Haven voters have an opportunity to vote on the proposed $45 Million Bond issue?
No. Back on March 2, 2020, the City Council authorized a Notice of Intent to issue revenue bonds for electric utilities, in an amount not to exceed $75,000,000. After publication of this notice, and during the early time of Covid, Grand Haven city voters had 45 days to file a request for a referendum, by filing a formal petition signed by 10% of Grand Haven voters. This petition was not filed, so voters lost the right to vote on the Bond Issue.
Who would make the final decision on authorizing the bonds for the BLP’s project? Does the City Council do that, or is it the BLP?
The Grand Haven City Council. The BLP intends to request the Grand Haven City Council to authorize them to issue “revenue bonds.” These bonds, with their interest, would be paid through the rates BLP customers will pay for 20 years.
Over the last decade, the BLP has paid a number of consultants to advise on this project. What have been the recommendations of the consultants, Burns and McDonnell and Power Engineers Collaborative (PEC) to the BLP?
Burns & McDonnell said, “GHBLP should continue to investigate the definition of the project and reflect on the priorities of the community. Hit “pause” on the reciprocating engine development, GHBLP should take time to further vet costs associated with the power generation component and determine what is the right amount to have locally.”
Burns and McDonnell also said, “Snowmelt for three city blocks should not be used to decide dispatching of power supply resources for 14,000 industrial, commercial and residential customers.”
PEC said, “PEC cannot conclude with certainty that it is more economical for GHBLP to build capacity vs. purchase capacity over the next 30 years. However, based on this analysis, it is reasonable to conclude that the GHBLP can construct capacity in a competitive manner to market-based capacity based on existing published rate data.” Lots of “iffyness.”
The BLP says they would like to sell $45,000,000 in bonds to cover the costs of their proposed project. What is that money for?
The BLP’s most recent publicly disclosed project cost estimate is from February 23, 2021. After the March 2020 Notice of Intent to Issue Bonds, the BLP could be reimbursed for certain costs from bond proceeds. Items in this category are:
The Sims Plant demolition
Electric Substation Improvements
Advanced (“Smart”) Metering
Items proposed for bond funding on which work has not started:
12.5 MW Plant
Site Infrastructure and Preparation
Costs in excess of the $45 million bond issue will be paid from BLP net revenues.
Note: These costs do not factor in the significant changes in the costs of building materials and labor in the last 6 months.
How many years would it take to pay off the BLP bonds? What is the proposed interest rate?
BLP’s has told the community that the proposed bond issue would be repaid over 20 years. They hope to get a 2% interest rate but the bond market will determine the actual interest rate.
Would potential buyers of BLP bonds do so if a very firm estimate of clean-up costs has not been established?
That is a question for bond purchasers. An attorney familiar with bonds has suggested bond issuers would be leery. Would you buy a piece of land if you believed there were environmental problems on the land and you did not know the cost of the clean-up?
Tell Us About the Proposed 12.5 MW "Peaker" Natural Gas-Fired Power Plant
What is a “Peaker” plant? I have never heard of such a thing…
Peaker plants are generally gas turbines or internal combustion gas engines most of which burn natural (methane) gas. The United States relies on more than 1,000 natural gas and oil-fired peaker power plants across the country to meet infrequent peaks in electricity demand. These peaker plants tend to be more expensive and inefficient to run for every megawatt-hour generated than baseload natural gas plants and emit higher rates of carbon dioxide and health-harming air pollutants.
What would be the capacity of the proposed plant?
12.5 MW. This is about 1/6 the amount of energy produced by the former Sims Coal Plant which was closed in 2020. It could supply about 1/3 of the BLP’s energy requirements, during normal times; and about 1/6 of the requirements in hot summer periods.
How much of the time would the proposed gas plant be used? When would it be used the most?
According to the BLP, the proposed gas plant would sit idle 90-95% of the time. It would be used primarily during the summer air conditioning season for cost-saving energy and in the winter months for Snowmelt. With the increasing supply of solar energy, the need for the peaker in the summer is questionable. It is also more cost-effective to improve heat/cooling efficiency by retrofitting homes than it would be to build a new generation facility that will also be harming the environment.
Since the price of natural gas is currently low, we should build a natural gas plant to obtain the best rates for the community, right?
No, natural gas rates are rising and projected to continue to rise. The market is no longer experiencing large decreases during the low-use months as the U.S. is now liquifying natural gas and selling it on the world market. The electrical efficiency of the proposed RICE (Reciprocating Internal Combustion Engine) peaker plant is only 41.5% which is much lower than the grid efficiency average.
How would the BLP get the gas supply it needs for the Peaker plant if the electrical grid “goes down?”
That is a question which has not been clearly answered. Normally large interstate gas lines are pressurized by compressors that are independent of the grid, however, we have seen during the 2019 polar vortex that a large portion of eastern Michigan’s natural gas system lost pressure when a single compressor station had an emergency shutdown and could not restart due to frozen lines. The loss of gas line pressure necessitated an emergency order and forced all large industries, in that region, to shut-down until the compressor station’s lines could be thawed and returned to service. Most recently, natural gas infrastructure failed spectacularly in Texas.
There is also the question of the level of priority a gas line to Grand Haven would have in the allocation of resources in a national crisis.
Is the BLP distribution system designed to provide electricity to the critical community services: The Public Safety Department? The Water Treatment System? The Wastewater Treatment System? The Hospital? Our Senior Citizen facilities? The radio stations? If not, how much would it cost to have such a specialized distribution system?
Most of our critically important facilities already have backup generation and operate as stand-alone (off-grid) systems. It is not known how long those backup systems would operate in a long-term emergency. The BLP Management says that they can supply the emergency needs of the city, but it is not clear how that would be done. There is no direct distribution system to these facilities.
What other Michigan municipal electrical systems are building stand-by “Peaker” plants smaller than 20 MW? How many have been built in the past 10 years, in the state?
No future municipal system Peaker plants smaller than 20 MW are planned in Michigan.
In the last 10 years, only the City of Sebewaing put on-line a small plant generating 7.7 MW, a combined heat and power system to provide hot water on a continuous basis to their largest electrical customer, Michigan Sugar.
How many Peaker plants have been built in the United States in the last 10 years? How many are planned? Where are the planned plants being built?
144 Small Peaker plants were constructed in the United States between 2011 and January of 2021. Currently, NO utilities, in the country are planning peakers. In fact, only 13 small peakers are planned, 12 of which will be on University campuses, with one being built for a private company.
The Downtown Snowmelt System
I read that last year the BLP bought, installed, and used large boilers for Snowmelt. But I also read BLP says the proposed power plant is needed for that function. What is really going on?
Prior to the 2020/21 winter, 5 high-efficiency boilers and connections were installed in the former Sims Water intake building, on Harbor Island. They cost about $1 million and are sufficient to provide both the “idle” mode heat and the “melt” mode. The proposed combined heat and power plant (CHP) would be an expensive investment in having another method of supplying heat.
Is the 12.5 MW Fossil Fuel, the natural gas plant needed for the snowmelt system to function?
Quite simply: nope. A gas plant is not needed. The system is currently working without the proposed plant.
But, The BLP says that they need the proposed power plant on Harbor Island so they can supply hot water for the snow melt system. Is this true or is there another way to provide hot water?
This is not true. There are already 5 high efficiency boilers that are installed and have already been used to supply heat for the snowmelt system. Another $18-20 million system is not needed. The city of Grand Haven currently pays 25% of the cost of the snow melt system.
Who sets the policy for the Snowmelt System?
There are two main policy setters: the City of Grand Haven, and the staff of the BLP, by their recommendations to the board. In addition, the Downtown Development Authority has some influence on the direction of the system. The City pays 25% of the Snowmelt system costs. Some people feel the City should be the sole policy setter.
Could the snowmelt system be moved to a place south of the South Channel? The water has to be pumped a long way from the site to the downtown. Is that a waste of energy?
Water is no longer pumped from the river. It is in a big loop with boilers and pumps in the former Sims water Intake building
The Snowmelt system could be moved to the south side of the South Channel of the River (maybe near the old Chinook Pier space), and it were to be run by the City, there would likely be cost savings. It would be slightly more efficient. The building would be quite small, perhaps 30 feet by 30 feet. A number of downtown retailers and building owners have recently requested that the City Council appoint a special committee to consider options.
Who pays for the Snowmelt system now? Does the City pay for it? The businesses downtown? Do the ratepayers of the BLP, who do not live in GH, pay some of the expense of the Snowmelt system?
The downtown retailers, and property owners, pay 75% of the annual cost of the Snowmelt System. The City pays 25%.
For the 2020-21 winter, operation costs were $64,306, with building owners paying $48,229, and the City paying $16,077. Building owners, who generally pass on Snowmelt costs to their tenants, paid an additional $5,000 into the maintenance fund.
The Proposed New BLP Operations and Technology Building Overlooking the Grand River
Did the BLP just complete a major remodeling of their offices on Eaton Drive just a few years ago?
Yes. The cost of that project to ratepayers is, according to the Grand Haven Tribune, was $3.3 million.
How many BLP employees would work in the proposed new building? What would they do?
According to the BLP, 19 people would be working in the new facility. They would primarily be technical people. BLP management has stated that they, themselves, would not be housed in the new facility.
Why does the BLP need a new office building on the river? How much will it cost?
A new office building is not needed on Harbor Island. There are no sewer or water services to the Island, and the roadbed would need to be raised because of the water level. In addition, there are serious environmental issues. The Eaton Drive. office could be expanded or an adjacent empty parcel could be purchased for expansion. The estimated cost of the new office building is in the range of $9.2 million, including required infrastructure improvements. (Source: Feb. BLP SIMS site redevelopment ZOOM meeting.)
If the building is built next to the proposed power plant, would it be a safe place to work?
It is likely that a thick blast wall would be built between the offices and the gas plant to keep employees safe. It is common for peaker plant operations to be controlled at a facility not at the actual plant. The BLP would have the facilities connected.
Does Harbor Island have the sewer and water lines needed for a new office building and small power plant? Is the road to the proposed site above the flood plain?
The Harbor Island site requires new water and sewer lines. The road, which required sand bagging due to high water in 2020, would need to be raised. The SIMS site is only 2 ft above the 100 year flood plain. We are all aware of the water fluctuations in the lakes.