Energy directive leaves Holland confused
HOLLAND — Gov. Jennifer Granholm's Executive Directive No. 2009-2, issued on Feb. 3, may slow down the approval process for expansion of the generating capacity of Holland's James De Young power plant. At the least, it has generated confusion in Holland.
The directive was reflected in the governor's State of the State speech the same day, in which she announced that "(b)y the year 2020, Michigan will reduce our reliance on fossil fuels for generating electricity by 45 percent."
Granholm said she has "directed the Department of Environmental Quality to evaluate, in consultation with our Public Service Commission, both the need for additional electricity generation and all feasible and prudent alternatives before approving new coal-fired power plants in Michigan."
More than two years ago, the Holland Board of Public Works, which operates the James De Young power plant, applied for an air quality permit from the DEQ for replacement of the plant's Unit 3 boiler with a new one. Unit 3, the oldest and smallest of the plant's three boilers, produces 11.5 megawatts of power; Units 4 and 5 produce 22 and 29 megawatts, respectively. The proposed new boiler would cost about $250 million, take four or more years to plan and build, and would generate 78 megawatts — effectively doubling the total capacity of the plant today.
Howard said the first milestone for getting the required air quality permit from the DEQ for increased coal-fired generation is a period of public commentary on the proposal. That wrapped up a few weeks ago, which then made the air quality application process complete.
Now, however, the BPW has been told in conversations with the DEQ since the governor's directive that the BPW application is incomplete — along with all other air quality permit applications involving coal-fired generation.
"We're not quite sure we think that's appropriate," said Howard. "The Department of Environmental Quality is not an organization that's there to assess the need for a (new generating unit). They are there to assess (the proposal): Does what's being proposed meet air quality standards?"
The Holland BPW is a municipal utility, not a commercial "regulated utility" such as Consumers Energy or DTE Energy. When the regulated utilities want to increase generating capacity, which can increase rates charged to users, the Michigan Public Service Commission determines if the alleged need for increased capacity is justified.
"For us, a municipal utility, that need assessment or evaluation of need is really (done by) our board and city council. So this idea that the DEQ now will somehow be evaluating the need for a (generating) unit, we think has some challenges," said Howard.
He said that in phone conversations with the DEQ last week, "they are now telling us that, based on this executive order, they consider our permit now incomplete, and so we have to do more. … We now have to supply some information to the DEQ and go through the public comment period again. And exactly what we have to give them at this point in time, we don't know; they haven't told us. We're waiting to find out," said Howard.
Maryann Dolehanty, a staff member of the DEQ who has been in touch with the Holland BPW since the directive came out, said, "Mr. Howard is correct that this adds an additional review element to their air permit application."
When asked how much time it would add to the permit process, she said, "It adds some time for the review process and is likely to result in additional (public) comment period for the Holland project, but how long that would take, I can't speculate."
Complicating the Holland BPW situation is the BPW's application to the federal Department of Energy for hundreds of millions of dollars to install a high-tech process that would capture and "sequester" far underground the carbon dioxide emissions from the new boiler. Carbon dioxide is thought to be a major cause of the green-house effect that many scientists believe is changing the earth's climate.
Howard said DOE officials have confirmed that two coal-fired power plant sites in the U.S. in particular have the best known geological formations for carbon sequestration — the Holland BPW and a plant in Jamestown, N.Y.
If DOE gave the nod to the Holland BPW to build the carbon sequestration infrastructure for the new boiler, the expanded De Young plant "would be a demonstration of a coal-fired power plant that has zero emissions" from the largest of its three boilers, said Howard.
Granholm sent a letter to Holland mayor Al McGeehan in January, supporting the Holland BPW proposal to "rebuild existing coal fired electric generation capacity and incorporate state of the art technology to capture, compress and store carbon dioxide."
Granholm wrote that the state "will assist the city of Holland in its effort to gain approval and federal funding for this important initiative."
Later, in her State of the State address Feb. 3, Granholm said the DEQ would evaluate alternatives to new coal-fired plants, and "one alternative is developing technology to prevent coal plants from spewing dirty carbon emissions into the air."
Howard told the Business Journal that if the Holland BPW "could have our air (quality) permit, we would stand in a very attractive spot" to receive the federal funding for the carbon sequestration under the DOE Clean Coal Power Initiative.
As it is now, said Howard, the BPW is "in a bit of a quandary…about where we stand."
Megan Brown, a spokesperson for the governor's office, told the Business Journal that Granholm still supports the Holland BPW "project" and that DEQ officials are "working with Holland officials to determine what steps, if any, need to be taken to comply with the governor's directive."
When asked if the Holland BPW will have to go through the air quality permit application process all over again, Brown repeated that the DEQ is "nailing down what needs to be done — if anything," in regard to the governor's directive, as it applies to the Holland BPW application for an air quality permit for expansion of the De Young plant. Brown emphasized "if anything" several times.