Coal Consequences

June 7, 2009

Coal Consequences:
Will electric bills in rural areas double?

By Anne Stanton 6/8/09

A proposed coal-fired power plant in Rogers City would at least double the electric bill of 33,000 co-op members living in rural Northwest Michigan, and that’s without any new regulations or taxes, asserted an energy activist opposed to its construction.
Tom Karas will introduce a resolution at Cherryland Electric Cooperative’s annual membership meeting this Wednesday that asks co-op leadership to deliver an estimate of how much the proposed Rogers City plant will cost and its impact on customer bills.
Karas, director of Michigan Energy Alternatives, believes the plant will cost nearly triple what the company has been saying publicly. He adds that building the plant now makes no sense, given the state’s drop in demand for electricity predicted over the next 10 years.
He hopes that once co-op member-owners learn the real cost of this proposed plant, they will urge its leadership to reconsider construction. The power plant would be operated by Wolverine Power Cooperative, which provides electricity to six co-ops, including Cherryland Electric Cooperative.

SPECULATION?
Tony Anderson, general manager of Cherryland Electric Cooperative, countered that Karas’ estimate is “speculation.” (The estimate was prepared by Tom Sanzillo, former deputy comptroller of New York state at Karas’ request.)
Anderson, however, wasn’t ready to say how much the plant would increase customers’ bills.
“We are trying to get an air permit from the state DEQ. We are trying to keep our costs to a minimum. It makes no sense to do an in-depth analysis if we have no air permit. As we told [Karas] repeatedly, if we get the air permit, we’ll do an analysis.”
Wolverine Electric Cooperative has already billed co-op members $63 million for the plant’s future development. Of that, it’s spent $18 million.
“A cooperative is supposed to be for the members, but we have a situation in which they’re being kept in the dark about the potential costs,” Karas said. “To say that there is no estimate available after three years and $18 million, it seems to me, it’s no way to be running a business.”

WHY A NEW PLANT?
Wolverine is pursuing the coal plant because it owns no base-load generation, and its principal contract for base-load power will end at year-end in 2011, e-mailed Nancy Tanner, Wolverine’s director of communications and member relations.
“We are developing the plant to ensure our members have a reliable source of electricity at a competitive price, the very reason electric cooperatives were formed decades ago,” she wrote in her email.
Anderson said Wolverine is pursuing the coal-fired power plant in order to provide its members with the most affordable source of energy.
Karas said that if Wolverine needs to find more electricity, it could easily buy electricity from Consumer’s Energy and DTE Energy. Both companies predict excess capacity due to a downturn in demand of five-to-six percent over the next 10 years, according to the companies’ most recent filings with the Michigan Public Service Commission.
Additionally, Michigan is striving to become a leader in alternative sources of energy and is requiring companies to ramp up their source of alternative energy. It’s now delaying permits of traditional coal-fired power plants, one of the biggest sources of global warming.

THE ALTERNATIVES
Karas disputes that coal is the cheapest form of generating electricity and cites a 2008 report prepared by the Federal Energy Regulatory Commission that says it costs more than four other alternatives, including wind, geo-thermal, natural gas and some concentrated solar.
That comparison doesn’t even include carbon capture or sequestration efforts, which make coal plants financially prohibitive, Karas said.
“Cherryland’s leadership just has to have a will to look harder for alternatives,” he said.
Karas said he calculated that the plant would actually cost $3.15 billion, using the figures that Wolverine provided to the state in a September 2007 permit application. Company officials have previously used a figure of $1.2 billion.
With the state suffering from record high unemployment and the bankruptcy of General Motors, Wolverine should pull the plug on the project—as 99 other companies have done across the country in the past few years, Karas said.
Anderson pointed out that in contrast to declining electrical demand statewide, Cherryland Electric saw a 1.5 percent increase in kilowatt hours used last year. That’s due to the fact that Cherryland services rural areas.
Anderson said that buying on the open market is an option, but it could potentially cost more.
Would it be wiser to wait to see how the economy shakes out before pursuing a new coal-fired power plant?
“That’s a decision we’ll make after the DEQ responds to our application for the air permit,” Anderson said. “We’ll do the financial analysis and we’ll make the best decision. Right now, we need options. We need affordable electricity in the future. We’re looking for options.”


Time to “talk dirty”

• Co-op Conversations.org is hosting Coal Night at the State Theatre on Monday, “Time to Talk Dirty,” on June 8, at 6 p.m. The evening will host a Robert Redford documentary, “Fighting Goliath: Texas Coal Wars.” Tom Sanzillo will also be on hand to talk about the “true cost” of coal plants.
• The public is invited to come to a question and answer forum with energy experts at the Hagerty Center, 715 E. Front Street, TC, at 3 p.m., on Monday.
• On June 10, members of Cherryland Electric Co-op members will meet at Wuerfel Ballpark at 4 p.m. Under the agenda item of new business, activist Tom Karas will propose a resolution that asks co-op leaders to reveal the impact of the proposed plant on electric bills.