Partnership Brings Energy Plant Closer To Completion

June 20, 2002
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TALLMADGE TOWNSHIP — A Texas-based energy company expects to begin construction in the spring on a new $400 million power plant furnishing more electricity to meet Michigan's growing demand.

Panda Energy International Inc. firmed up its construction schedule after signing an agreement with energy-services provider Alliant Energy Corp. of Madison, Wis., to jointly develop and operate the natural-gas-fired, combined-cycle plant.

The deal with Alliant is a "big step for us and for the project to move forward," said Rudy Rivas, project manager with Panda Energy. Under terms of the deal, Panda and Alliant will split the $400 million cost to build and equip the 1,000-megawatt plant.

Alliant will supply Panda with four natural gas turbines and the equipment needed to connect the plant to the region's electrical grid. The agreement is crucial to the project because Alliant has expertise developing and operating combine-combustion plants, Rivas said.

The equipment needed for the plant typically takes several months to build and deliver, he said.

Construction of the Tallmadge plant is expected to take 20 months to 24 months to complete, with full commercial operation scheduled to begin in early 2004.

Dallas-based Panda announced plans for the new plant in June 2000, at a time when in-state generating capacity had less than a 5 percent reserve margin, forcing electric utilities to rely heavily on out-of-state generators to meet peak demands during the summer.

Panda has worked since the announcement to secure a partner and obtain local and state approvals. The project has met with stiff opposition from some residents in the area of the site, near 8th Avenue and Lake Michigan Drive. After losing a court challenge to the project in Ottawa County Circuit Court, opponents are appealing their case to the Michigan Court of Appeals.

Panda and Alliant will sell most of the electricity generated at the Tallmadge plant on a wholesale basis to electric utilities, while reserving a small percentage for selling on the spot market, Rivas said. The market in Michigan for new generating capacity remains strong, even with the development or planned development of several other new power generators in the state, including the new Mirant Energy facility in Zeeland that began its first phase of operations last spring.

"Not only is there a market but there is a need for baseload generation in Michigan," Rivas said.

Electricity sales in Michigan grew 1.2 percent in 2000 and another 1.6 percent for the first six months of 2001, compared to the same period a year earlier, according to the Michigan Public Service Commission's latest energy appraisal.

Overall, there are seven new electric generators now under construction in Michigan, with a total generating capacity of 4,920 megawatts that is scheduled to go into operation by June 2002 or 2003.

"New generating units and increased transmission capacity continue to improve the outlook for electric supply in Michigan," the MPSC energy appraisal states.

The Tallmadge facility is designed as a combined-cycle plant that will use hot gases from its emissions to produce steam and drive a generator.

"The idea is to squeeze the last ounce of energy you're getting from gas combustion and generating as much energy as possible," Rivas said. "It makes the whole system a lot more effective."

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