Veolia Energy finds GR a natural fit

December 16, 2008
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The company that recently bought the District Heating and Cooling Operation from Kent County was interested in owning it because of the expansive development that has occurred downtown over the last decade and because of the reputation the city has earned over the past half-decade for embracing sustainable business practices.

And Keith Oldewurtel, vice president and general manager of Veolia Energy Grand Rapids LLC, said his firm has already started down a path to make the DHCO even more efficient and more sustainable.

Oldewurtel, a local resident for the past 25 years, with 30 years experience in the utility industry, said his staff is completing the facility’s transition and his company is committed to making investments to enhance the overall operation of the facility at 156 W. Fulton St.

“We’re in the process of doing preliminary engineering on a major project, which is the installation of an economizer. What we will actually be doing is taking the waste heat from the facility, which now is not utilized, and reusing that waste heat to improve the efficiency of the plant, which will essentially allow us to produce more steam with less energy,” he said.

Veolia Energy Grand Rapids offered the county $2.4 million for the DHCO, which uses four industrial-sized boilers that can burn either natural gas or low-sulfur fuel oil to heat and cool many of downtown’s buildings along a 7.5 mile underground steam pipeline.

The county owned and operated the plant from 1990 until the sale closed a few days after Thanksgiving. The entire transaction took about a year, and Oldewurtel said the sales process moved along without a hitch.

“I think everything went well. I was involved in kind of the back-end of things. But my discussions on the history and the flow of information — as you can imagine there was a lot of information back and forth — went relatively well. There were no surprises that came up from either party, and the closing itself went very well,” said Oldewurtel, who joined the local company in October.

An interesting facet of the overall deal was Veolia Energy Grand Rapids had a choice of being regulated by the city or by the state’s Public Service Commission. The firm selected the city and signed a 30-year, non-exclusive franchise agreement with the city roughly two months ago. Why the city, rather than the state?

“The rationale behind that is local regulation is better than regulation that is done from afar. You’ve got local decision-makers. You’ve got the city of Grand Rapids, which our entire service area is within their municipal jurisdiction. It just makes a lot of sense to be regulated by leadership that is local to the area,” said Oldewurtel.

Oldewurtel and a new site administrator have joined the eight plant employees that are staying on the job to bring the facility’s staff to 10.

Before the sale closed, Oldewurtel met with many of the system’s 135 customers, a diverse group that includes Saint Mary’s Health Care, DeVos Place, Van Andel Arena and most of the office buildings in the Central Business District. He said the feedback he got from those who attended the meetings was very positive.

“I think most of the customers see the resources and the depth that Veolia Energy brings,” he said.

Veolia Energy Grand Rapids is a division of Veolia Energy North America, the leading owner and operator of district energy networks in the U.S. Based in Boston, Veolia Energy North America owns and operates 22 plants in eleven cities. Veolia Energy North America is a subsidiary of Veolia Environnement, which is headquartered in Paris. It had revenue of $48 billion in 2007 and employed 320,000 across the globe.

Oldewurtel said the county’s DHCO was a natural addition for Veolia Energy, as the downtown operation fits nicely into the firm’s core business.

“The economic development that has gone on in the community — the growth in the community, the growth of the downtown area — provides a very strong customer base. And I think the whole sustainability-issue initiative in the area and Grand Rapids is a real good fit for Veolia Energy and for the steam business,” he said.

“This is Veolia Energy’s business. We’re focused on operating and owning these types of systems in downtown-core areas, and we’re going to bring those resources to operate the business with a real significant focus on customer service, on sustainability, and on supporting the city’s economic development, particularly in the downtown-core area.”

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