BLP savings outlined, Shiras future unknown

The Marquette City Commission and the Marquette Board of Light and Power holds a well-attended joint work session Tuesday evening to discuss the BLP’s energy dispatch future and establish a more direct line of communication between the two entities. (Journal photo by Mary Wardell)

MARQUETTE — Cost projections from the Marquette Board of Light and Power show that by taking the coal-fired Shiras Steam Plant offline, the BLP could save more than $100 million over 20 years — likely translating into zero rate hikes until at least 2021.

BLP Acting Executive Director Tom Carpenter said during a presentation to the Marquette City Commission Tuesday that based on 20-year models of different operating scenarios, the utility’s most cost-effective option is to alternate flexibly between the Marquette Energy Center and the Midcontinent Independent System Operator, or the grid.

By doing that, the BLP saved $40,000 in the last five days alone, Carpenter said.

He gave the presentation at a joint work session with the BLP Board of Directors.

Carpenter’s presentation gave technical background for why the BLP built the MEC, for reliability, and why it now allows the BLP to source power flexibly from the grid — namely that it only takes five minutes to switch on and off, allowing the BLP to buy from the grid whenever it’s cheaper than generating it. MISO prices fluctuate predictably throughout each day, week and year based on electrical demand.

“If we dispatch with the MEC and utilize the MISO market to our advantage, … we can save over $100 million in 20 years in power supply costs,” Carpenter said. “Now what that means is not running Shiras.”

With Shiras offline since the beginning of September, savings have already been greater than anticipated, he said.

Studies need to be done to find out the costs and advantages of placing the 34-year-old steam plant that sits on Lake Superior shoreline in a layup status — effectively “mothballing” it for an unknown future — versus other options like decommissioning it permanently, Carpenter said.

“Let me clarify another point here, what we’re talking about is not rolling a wrecking ball down to the Shiras Steam Plant. All this means is we don’t run it,” Carpenter said. “We can put it in a layup status, so that we can come back to it someday if conditions greatly change.”

There are costly environmental upgrades needed to keep Shiras viable, however, he said.

Mayor Pro Tem Tom Baldini asked, “If you can save $100 million in 20 years by mothballing it, why not just tear it down?”

Carpenter said it’s important to first go through an evaluation process to find out “what’s it worth to have?”

Baldini also wondered if issues might arise from the city requiring We Energies, in closing the Presque Isle Power Plant, to dismantle and clean the site, but not requiring the same of its own power plant.

Carpenter said a study will get underway in the next six months, and he mentioned the BLP could do what Holland, Michigan, has done in closing its coal plant — engage the community to determine what people want.

Carpenter clarified that any dispatch changes would be taking place in the fall of 2018 and beyond.

“We’ve got 150,000 tons of coal coming this year that we have to burn and utilize, we have a brand new energy center, there’s still some kinks to work out,” Carpenter said. “Shiras will be online through the winter and next summer, for sure, so everything we’re discussing here is year one to five, five to ten, and out a ways.”

Commissioner Sara Cambensy said the prospect of closing all the city’s power plants is “kind of a scary thought, … all of a sudden switching to gas.”

“What if you can burn coal more clean? What technologies are coming?” Cambensy asked. “I think a lot of people out there wouldn’t want to move this fast when making a shift in investment in energy. I feel like there’s a lot of hesitancy to just throw away the old without kind of knowing exactly what we’re doing. That’s just maybe from the people I’m talking to, not that they’re not environmentalists, not that they don’t want better emissions, but I think a lot of people are questioning, ‘what if?’ What if natural gas isn’t exactly where we want to go?”

She said she supports the study.

Commissioner Mike Plourde said it’s important to note how much cleaner natural gas is than coal.

Based on the actual emissions of Shiras Unit 3 last year, the MEC is expected to reduce sulfur dioxide emissions by 99 percent, carbon dioxide emissions by 54 percent and nitrous oxide emissions by 85 percent, according to BLP documents.

Carpenter said the people who hedge natural gas say the price is projected to be relatively flat for the next 10 years.

“You can actually buy a contract almost that far out today that’s relatively flat with marginal increases,” Carpenter said. “I can’t believe anybody better than (them), because they’re betting millions.”

BLP board member Dave Carlson disagreed.

“I’m a naysayer on the natural gas price,” Carlson said. “Things are always changing.”

Jenn Hill of Marquette spoke at public comment as a private citizen, though she represented the U.P. in the community engagement process for the state’s new energy laws.

“This new technology is coming,” Hill said. “The system that we have that has emerged in the last 100 years may not be the best system for the next 100 years in how utilities relate to each other. We have this excess capacity. … How do we work together within the U.P. to figure out our energy system with all this new technology and all these new capacities that we have available to us?”

Mary Wardell can be reached at 906-228-2500, ext. 248. Her email address is mwardell@miningjournal.net.