Electric officials give insights at Bay Economic Club

ESCANABA – The Bay Area Economic Club closed out its 2013-14 season with presentations on the state of energy in the Upper Peninsula by Brett French, senior regional manger – external relations for American Transmission Company, and Mike Furmanski, Escanaba electrical superintendent.

While based out of Wisconsin and founded to meet new regulatory systems put in place around the turn of the millennium, ATC provides power through transmission lines and substations in all but the Western-most portions of the U.P.

“We keep the lights on in the footprint with about 9,500 miles of transmission lines and a little more than 500 substations throughout the footprint, and actually roughly 20 percent of our system is in the Upper Peninsula,” sad French.

ATC has a variety of transmission upgrades planned for the U.P. including a new substation being built on land acquired from NewPage. The substation, known as the “Old Mead Road” substation, will be connected to Chandler by six miles of new transmission lines and to the Wisconsin state line at the Holmes substation by roughly 60 miles of new transmission lines.

“The focus and the real driver behind these projects first and foremost is, again, to ensure that there is adequate level of reliability,” said French.

Ensuring reliability is a two part job, with power generators providing the power that transmission companies like ATC distribute to consumers.

“Transmission and generation are codependent on one another. It takes both to keep the lights on. It does no good to have all kinds of poles and wires and other transmission devices if you don’t have an adequate source of the electrons that are required to keep the lights lit,” said French.

Keeping power supplies adequate can be difficult, especially in the U.P. where most power is imported from Wisconsin. However, generators can’t just shutdown overnight – even if they wanted to.

Midcontinent Independent System Operator (MISO), a regional transmission organization (RTO) that ATC belongs to, has the final say in when or if a power plant goes idle or is retired. Power generating facilities must formally request to suspend or cease the operation of a generator from the RTO.

“We do have (a System Support Resource) agreement with MISO, which pays us $3.7 million per year to keep the plant available, but that SSR agreement is going to go away someday and we need to be prepared for that when it does happen,” said Furmanski, referencing the Escanaba power plant that the city has been trying to sell for four years.

The plant does not supply power to the city. In December of 2011 the city requested idling the plant for 36 months in an effort to reduce the $4.5 million cost of keeping the plant open. MISO denied the request.

Currently, the city’s goal is to sell the power plant to Escanaba Green Energy, which plans to convert the plant to burn biomass. Doing so would eliminate the city’s cost for operation and maintenance. However, EGE has suffered multiple funding setbacks since the company first began negotiating with the city more than two years, leaving the plant’s future uncertain and the city examining other possible futures for the plant.

MISO has the right to cancel an SSR agreement with 90 days notice. If that happens and the city chooses to idle the plant, the $3.7 million in annual SSR payments would disappear, plant staffing would be reduced, and increases in costs would lead to a 12 percent rate increase for power customers.

Another alternative if the SSR agreement was terminated is for the city to reopen the plant as a power supplier. The $4.5 million annual cost of keeping the plant open – plus the costs of fuel – would return, staffing would be increased, and electric rates would jump by 35 percent.

“I don’t see this as much chance of us getting back to this point,” said Furmanski. “Whether the plant sells or not, by December of this year we’d be filling another request to MISO to either idle the plant or possibly to retire the plant, but either way I don’t see us ever getting to this future.”

The final option would be to have the plant retired. Assuming the SSR was terminated or MISO agreed with the retirement plan, the city would have no annual costs, however, there may be costs associated with closing down the facility.

“In the four years we’ve been trying to sell the plant there have been three parties that have contacted us that they’re interested in the site but not as a power generating station,” said Furmanski.

Because retiring the plant would require a citizen vote and Michigan laws restricting the frequency of elections, the city has scheduled a ballot question for May 6 on the plant’s future should the sale to EGE fail. This allows the city to ask MISO for the needed approval without incurring $125,000 in monthly costs to keep the plant open while waiting for a citizen vote.

“Rather than just waiting at a cost of $125,000 a month we could ask right away,” said Furmanski.