Holland BPW Mulls Power Options

December 22, 2003
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HOLLAND — The area’s municipal utility will decide early next year on an option to expand generating capacity to accommodate future growth around Holland.

The Holland Board of Public Works reports that it will choose between expanding on the site of its existing power plant, or building a new generating station in Manistee in collaboration with several other municipal utilities around the state.

Both alternatives appear viable for providing the municipal utility the additional capacity required for years to come.

“Technically, I have no doubt about either of them working,” said Dave Koster, director of power resources for the BPW.

“From a technical and economic standpoint, I’m comfortable with either,” Koster said. “Everything looks good at this point. It’s just a matter of working through the final details.”

The Holland BPW needs to develop 60 megawatts to 100 megawatts of new generating capacity, Koster said.

On the table for consideration is partnering with several municipal utilities in the state to build a 425-megawatt, $700 million coal-burning power plant in Manistee. The utilities are members of two consortiums — the Michigan Public Power Agency and the Michigan South Central Power Agency.

The proposal is for the utilities to work with Tondu Corp., a Houston-based business development firm, that already owns and operates a 54-megawatt power plant in Filer City, just outside Manistee.

Partners in the venture, known as Northern Lights, would own shares of the generating capacity and cover their share of the corresponding construction and operating costs.

That kind of arrangement is familiar to the Holland BPW.

The utility, via the Michigan Public Power Agency, holds stakes in Consumer Energy Co.’s J.H. Campbell Generating Complex and Detroit Edison’s Belle River power station in northern Macomb County.

In the Tondu option, the Holland BPW would become business partners with counterparts that share common operating philosophies and structures, Koster said.

In the other option under consideration for generating additional electric capacity, the BPW is weighing what’s known as a “circulating fluidized bed” on the site of the BPW’s James De Young Generating Station on the eastern end of Lake Macatawa.

The addition would use a new technology that burns coal at a lower temperature, resulting in lower nitrogen-oxide emissions.

The option would also give the BPW the opportunity to burn sludge from its nearby wastewater treatment plant, as well as wood and tires.

The cost for the 70-megawatt addition: $137 million.

Both options have distinct advantages.

On the plus side, the Northern Lights option would generate economies of scale through the partnership with Tondu and other municipal utilities. It also would offer sufficient space for future expansion, and would have a lower cost: $31.16 per mega-watt hour vs. $37.45 per mega-watt hour for the circulating fluidized bed.

Working in favor of the addition to the De Young power plant in Holland, on the other hand, is the BPW’s ability to fully own and control the capacity, including load output.

Too, burning wastewater sludge would solve an expensive disposal problem for the municipality. Sewage plant sludge is an odorous concentrated form of sewage solids.

The BPW, with about 30,000 industrial, commercial and residential customers in the city of Holland and surrounding townships, has studied options for new generating capacity for two years.

In a few years, it reports, peak electric demand will begin outpacing the agency’s generating capacity. This would force the agency to buy power on the wholesale market during times when demand is highest and power is at its most expensive.

During the 1990s, the BPW’s power demands grew an average of 6 percent annually, Koster said.

The soft economy of the last three years has since tempered growth, resulting in flat demand, he said.

The key to deciding the future is balancing the cost of developing new generating capacity with determining future needs and demands.

And determining future growth is a tricky task that requires deliberate consideration, said Maryam Komejan, chairwoman of the BPW’s board of directors.

Whatever option the BPW takes, it must meet the demands upon the utility for 20 years or more.

“We have to have a really good understanding of what is happening to our community and what are the needs and the cost for how to meet those,” Komejan said.

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