In an apparent effort to prod the Lansing City Council to approve a $26 million power substation proposed for Scott Park, the Lansing Board of Water & Light is claiming that building it elsewhere would require a 4 percent multi-year rate increase amounting to $70 million.
But an alternate site near its REO town cogeneration plan could house the substation for an additional $13 million, BWL officials say.
Yet they decline to explain why they want $70 million over seven years to cover just $13 million in added expense — and won’t talk about it for at least a month.
“We’ve tried extremely hard to be responsive to questions in public meetings and sometimes the fluid nature of these meetings and our willingness to be responsive even when all the facts aren’t available at times causes confusion,” said Stephen Serkaian, BWL executive director of public affairs. “In order to mitigate this matter, we’ll refrain for further discussion of specific numbers until the Aug. 22 Council hearing.”
“City Pulse’s advocacy against the Central Substation location at the Scott Park site has deeply troubled me ... ,” Serkaian wrote in response to request to explain the utility’s math. “I’ve tried to be as responsive as possible, but you simply don’t like our answers to your questions. Quite simply, the BWL has a fiduciary responsibility to its ratepayers to spend its resources in the most prudent manner as possible. Spending more than $13 million more for a substation at Diamond Reo Way compared to the Scott Park site is not a prudent expenditure of resources, nor would it be a responsible allocation of funds."
[Editor’s note: In a column, not a news story, editor/publisher Berl Schwartz raised aesthetic and other issues with building the proposed substation in Scott Park. The Lansing State Journal has endorsed the BWL plan in an editorial.]
The utility’s decision to stop addressing substation finances does not sit well with some leaders in the community.
“It feels like punishment for not agreeing with them,” said Joe Vitale, president of Preservation Lansing, which has adamantly opposed building the substation in Scott Park, which is at the intersection of Washington Avenue and Malcom X Street, the gateway to REO Town.
The rate and revenue discrepancy is but the latest turn in BWL’s often changing narrative about the location for the substation, its cost and the engineering challenges.
The need for the substation arises from BWL’s desire to end all electricity and steam production at the iconic coal-burning Eckert plant by 2020. The current substation is located adjacent to it in the Grand River floodplain.
The site could accommodate a new substation, but the cost estimates keep changing.
City Pulse reported in April that the BWL placed the cost of maintaining and updating the Eckert substation at $39 million. But earlier this month, utility officials told the City Council that retaining the substation in its current location would cost ratepayers $42 million more.
BWL officials said keeping the substation at the Eckert plant would require it to continue operating the Eckert plant until 2027 at a cost of “millions of dollars.” And it has said that continuing to operate the coal-fired plant would put tons of pollutants into the air.
BWL also has changed its revenue projections on a 1 percent rate increase tied to the substation. In March, BWL General Manager Dick Pfeffley told Park Board members that a 1 percent increase in rates would raise $4 million. That, the BWL acknowledged last week at the City Council Committee on Planning and Development, was wrong.
A 1 percent rate increase is equal to $2.5 million in annual revenue from electrical customers. It would raise $17.5 million over seven years. Serkaian said in a March email to City Pulse that a 1 percent rate increase would equal an 81-cent increase in the monthly billing for the average ratepayer. BWL says it already has the $26 million for the Scott Center location allocated in its budget. Also last week, BWL said if proposed walls and park improvements were removed from the budget for the Scott location, the base cost of the project would be $20.7 million.
Councilwoman Jody Washington, who chairs the Development and Planning Committee, said she was surprised about the math and wanted BWL officials to explain it.
“I want them to put it in a simple spreadsheet,” she said. “I want to see that before the public hearing.”
Council President Judi Brown Clarke, a committee member, also called for clarity on the cost estimates.
Despite claiming to have conducted an exhaustive review of possible locations, BWL officials acknowledged last week that an industrial lot about a quarter-mile from its headquarters’ front door was never reviewed. Officials did review a proposal to purchase and raze 17 homes in the neighborhood directly to the north of the plant.
A presentation at the City Council last week shows officials rejected that site because “several residents (17 households) would be displaced and adjacent neighbors would be impacted.” There was no of costs of this project.
But officials said in March the South Street neighborhood was rejected because it “would have been extremely expensive to connect to the downtown electrical cables and would have involved the purchase of over a dozen occupied homes and displaced a number of residents.”
The underground conduits run right up Washington Avenue, the presentation shows. BWL officials have said the conduit along Malcolm X at Washington, where the lines would need to cross west, are congested, making relocation of the 18 lines that power downtown difficult.
An alternate route, following the railroad tracks, crossing the Grand River and connecting to the Eckert Power Substation infrastructure would not work, BWL officials have said, because the conduits are in poor repair.
Putting the distribution lines into the air would require at least nine power poles, with two lines running down each. To run those lines like that would require a swath of real estate in REO Town 950 feet wide, Serkaian said.