2017-04-08 / News

New Energy Order Could Be Good for Cloverland

By Kevin R. Hess

Cloverland Electric is hopeful that a recent executive order signed by President Donald Trump could reverse the decision made by Wisconsin Energy to close the Presque Isle Power Plant (PIPP) by 2020, which Cloverland says will ultimately cost its local members more money. Tuesday, March 28, President Trump signed an “Energy Independence” executive order, rolling back the Clean Power Plan rule enacted by former President Obama in 2015. The rule was enacted, in part, to reduce carbon emissions by requiring a 32% reduction in greenhouse gases emitted by existing power plants by 2030. The plan has been legally challenged, with the United States Supreme Court issuing a stay last year, giving the new administration time to review the rules. Cloverland is still involved in a case pending before the Federal Energy Regulatory Commission (FERC) concerning the costs to run PIPP in 2014 to 2015. FERC has three vacancies that have to be appointed by the President and confirmed by the Senate before the case can be decided.

The Clean Power Plan called for moving electricity generation away from fossil fuel-fired coal power plants to natural gas-fired power plants, as well as an increase in the use of renewable energy sources like wind and solar. In response to the plan, a new natural gas fired power plant was proposed in August. Governor Rick Snyder said the new plant could provide a long-term, clean energy electricity power solution for the U.P., as well as save money for residential electricity customers. Cloverland contends that the proposed plant may not be the best solution, believing their ratepayers will end up paying for the new gas-fired plant, estimated to cost $277 million. The plant would produce 170 megawatts of power at two sites in the U.P., a large plant in Negaunee Township near the Tilden Mine, and a smaller plant in Baraga Township, replacing the energy produced by PIPP, allowing the coal-fired plant to retire by 2020.

Under the agreement, Michigan’s ratepayers would not have to pay the additional electricity surcharges associated with keeping PIPP open until it is retired. In addition, Upper Michigan Resources Corporation (UMERC) is asking Michigan’s Public Service Commission to approve a 20-year special power supply contract for the Tilden Mine as part of its application for the new plant. But Cloverland believes its customers may have to pay the surcharges in the future.

Jason St. Onge of Mackinac Island serves on Cloverland’s board.

“Everybody wants the cleanest power possible and what’s best for the environment,” he said. “In this particular case, however, having the people of the U.P. cover the cost of a new plant doesn’t solve anything.”

Cloverland uses between 30% and 40% of its power from the plant. They buy the remaining power elsewhere. Expecting ratepayers to pay for a new plant isn’t reasonable, they say.

“We’re not fully recovered from the recession of 2008,” says Mr. St. Onge, referring to the Eastern Upper Peninsula. “Keeping the plant open is the best option for our ratepayers. Anything that can stave off increases would be a positive thing.”

Wisconsin Energy originally made its decision to close PIPP after losing two of its biggest customers, the two iron ore mines near Marquette, when the mine operators chose an alternative electricity supplier. This decision came as a result of an exemption in Michigan’s customer choice law. In order to keep the plant open, Wisconsin Energy petigoals,” tioned FERC to require the electric utility companies in the Upper Peninsula to cover the majority of operating costs to keep it running. FERC sided with Wisconsin Energy, passing $60 million in operational costs on to the electricity providers in the U.P. In July, Cloverland learned that its members would have to pay an $11.7 million surcharge to keep the plant running. In a 2014 letter sent to Governor Snyder and Attorney General Bill Schuette, the U.P.’s three electric cooperatives described PIPP as the most important plant in the U.P., providing more than 80% of the needed baseload power supply.

“This executive order could reduce the pressure to close PIPP and continue its operation providing affordable electricity for the Upper Peninsula for many years to come,” said Dan Dasho, Cloverland’s president and CEO. “The Governor’s office is looking for energy solutions for the Upper Peninsula, and keeping the Presque Isle Power Plant open should be considered.”

Brian Manthey, spokesperson for Upper Michigan Energy Resources, says that keeping PIPP open would require some major upgrades to meet environmental standards outside of those enacted by the Clean Power Plan.

“The executive order has not changed our plans at all,” said Mr. Manthey. “The new plants would not only create a better environmental footprint, but we feel this will be a great benefit to customers in terms of reliability and cost going forward.”

Pending approval from the Midcontinent Independent System Operator (MISO), construction of the generating facilities could begin in late 2017 or early 2018, with an anticipated operation date in 2019.

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