Power Sources

Mich. public power city mulls replacements for coal-fired plant

Grand Haven, Michigan, on the eastern shore of Lake Michigan, expects to decide later this year what will replace the city's 70.4-MW J.B. Sims coal-fired power plant after it generates its last electrons on June 1, 2020, according to David Walters, general manager of the local public power utility.

Any solution will most likely include the construction of a 35-40 MW natural gas reciprocating internal combustion engine, or RICE, plant on the footprint of the existing Sims station on Harbor Island.

At its December meeting, the Grand Haven Board of Light and Power agreed that whatever comes after Sims must have the ability to continue powering the city's downtown underground snowmelt system, something Sims has done successfully for years.

"The board made a commitment to our City Council that local generation would be part of our long-term power supply plan and that our electric utility would continue to supply heat for the downtown snowmelt system," Walters said.

A new report prepared by Burns & McDonnell affirmed previous local sentiment that Sims has reached the end of its useful life and should be retired. The facility went into commercial operation in 1983.

Unlike many other retiring coal plants in the US, Sims' pending demise is due more to economic than environmental issues.

The local utility's average load is around 36 MW to serve its approximately 14,200 customers, though it can spike to near 70 MW during the summer months. In the past, Grand Haven has sold Sims' surplus power into the wholesale market, earning revenue that helped defray the plant's operating costs.

But those off-system power sales have dried up as Sims has found it increasingly difficult to compete with lower-cost natural gas generation, Walters said. "Sims is a high-cost resource now.  That is the primary reason we're shutting it down. It has lost its competitiveness in the wholesale marketplace."

Sims is equipped with a scrubber to reduce sulfur-dioxide and particulate emissions and complies with current environmental regulations.  However, the utility would be forced to spend millions of dollars over the next few years to replace aging equipment and make other repairs to ensure its continued operation during the next decade.

Burns and McDonnell is recommending the city replace Sims with a new RICE plant. Such a project most likely would cost approximately $45 million and be financed through the issuance of local municipal revenue bonds.

Natural gas would fuel the RICE plant. "Several years ago, Black & Veatch conducted a study to determine the best place to site a local gas-fired generation facility. 

The best site was determined to be the current Sims plant property, he said. "The Sims plant is on Harbor Island which is adjacent to our downtown district." Gas supply lines are already located on the island as gas is used to start up Sims, "so there is adequate gas supply to the site. There are also high-voltage electric transmission lines that go to the island. These are good reasons to build whatever follows Sims at that same location."

The tentative schedule calls for a new plant to be in commercial operation by June 1, 2023. That is a full three years after Sims is expected to be retired, and Grand Haven will require short-term capacity and energy during the transition period. To do that, Grand Haven plans on utilizing its membership in the Michigan Public Power Agency (MPPA), a joint action agency of 20 Michigan municipal electric utilities.

"Burns and McDonnell is currently working on a project definition report to better define exactly what the new facility may look like.  I think a plan will come to the board and council for approval in late 2019," Walters said.

Burns & McDonnell cautioned against "overbuilding" capacity to serve the needs of Grand Haven, which is experiencing modest - about 0.5% - annual load growth. If market conditions change in the future, additional generating units can be added to the Harbor Island facility "while avoiding the risk of overbuilding today," Burns & McDonnell said.

A new replacement power plant will only be part of a more diverse power supply portfolio the utility plans on developing with MPPA.  

Whatever final compilation of resources this portfolio contains, Walters said it is important for the muni to maintain stable rates for its customers. Currently, rates average around 12 cents/kWh, which Walters concedes are "higher than our public power neighbors. Our goal is to hold rates stable through the transition, so the BLP can become more competitive."

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