Veolia Energy sharing more plans to improve

July 20, 2009
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(Editor’s note: this is the final installment in a series of stories examining the plans for Veolia Energy in Grand Rapids.)

A new heat exchanger, expected to be operational in November, isn’t the only improvement Veolia Energy Grand Rapids has planned for the downtown District Heating and Cooling Operation.

The firm, which took possession of the steam facility from Kent County in December, also has its sights on replacing a portion of the current distribution system with a new high-pressure system over the next three years. The section currently targeted for replacement accounts for about a quarter of the DHCO’s total steam distribution.

“Right now, the distribution system consists of a combination of low pressure plus high pressure. There is about five miles of high pressure and a couple of miles of low pressure. Most of the low pressure is old and is where we probably spend the majority of our maintenance dollars,” said Keith Oldewurtel, Veolia Energy GR vice president and general manager.

“It’s older so it’s more corroded, and we end up with more leaks on it. We have more heat loss on it, so it’s less efficient.”

Veolia Energy GR will install new piping through the existing low-pressure section. The higher-pressure pipe is smaller and comes pre-insulated. It’s an alteration the company has done elsewhere.

“One of the things we’re going to do, that we’ve done successfully in other cities like Baltimore and Boston, is actually run new high-pressure pipe through our old low-pressure conduits so that we don’t have to dig up a whole block of city street,” said Oldewurtel.

Oldewurtel said wasn’t sure how much the conversion would cost; he was putting together the project’s capital budget when the Business Journal spoke with him. Veolia Energy GR also plans to re-insulate the pipes in the manholes to cut heat loss and reduce leakage.

When the company took over the plant late last year, one of the first things it did was change the billing system. A modification was made to accommodate what Oldewurtel called the “tariff system” imposed by the regulatory agreement Veolia Energy GR entered into with the city of Grand Rapids.

The outcome of that contract meant customers now are charged roughly the same amount every month, instead of higher bills during the heating season and lower ones during the summer months. A year’s worth of fixed charges for the service was spread out evenly in monthly payments and then the monthly cost for the amount of steam used was added to the base fee.

“Essentially, the customer with us pays a service charge plus a connection fee, which is a 12-month equal payment, regardless of use and consumption. And then they pay a consumption charge for what they actually use,” said Oldewurtel.

“With the county, the bill would have been 100 percent consumption-based, with essentially the same cost component, if all of the costs were equal. A customer on the county system would have paid, say, $10,000 for their steam for the year. Under the Veolia rate structure, it would have been essentially the same $10,000 but they would have paid it differently.”

Oldewurtel said customers who keep a close eye on their steam consumption have likely seen their overall charges reduced because some of the company’s rates are lower than what the county charged. He also pointed out, though, that the cost of gas has dropped since the firm took over, and those lower charges have been passed on to customers.

One of those customers is Grand Valley State University, which heats and cools its DeVos Center and Secchia Hall through the system. GVSU is buying the portion of the system that serves the Pew Campus on West Fulton Street and will operate it. The university is investing $1.2 million into closing off that section from the rest of the system, a move that gives the college the ability to re-use the heated water that would normally escape. The action is expected to save the school $130,000 a year in fuel costs alone. GVSU expects the cost savings and increased efficiency should cover the investment in eight years.

“That heated water has value to us,” said James Moyer, GVSU assistant vice president for facilities planning. “There is still a lot of energy in that hot water, and that energy is valuable.”

Now that he has settled in, Oldewurtel said he will spend more time with customers trying to help them manage their steam use.

“We’re now into the summer season where some customers are seeing that their bills are higher than what it was last year. But it’s pretty easy to point out to them what their bills were over the winter and remember how much lower they were,” he said. “If we add those numbers up, our overall cost is coming in lower for most customers than what their previous service was.”

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