BWL plans $500 million power plant; scope and timing questioned

The BWL’s big announcement Monday that it plans to build a $500 million natural gas plant drew a mixed response.

Depending on whom you ask, it’s either the utility’s biggest step yet toward a clean energy future or a premature, oversized beast the Lansing Board of Water and Light should have proposed to the community and not imposed upon it.

BWL plans to start building the plant, the biggest project in its history, on the site its Erickson Power Station in Delta Township in January 2019 and hopes to flip the switch in early 2021.

BWL General Manager Dick Peffley said that with the new plant on line, the utility will be completely coal-free by the time the aging Erickson Station closes in 2025. The utility’s other baseload generator, the Eckert Station, is set to close in 2020.

“At a time when we have climate change deniers in power in Washington, we have our local utility embracing an environmentally sustainable future for metro Lansing.”

— Lansing Mayor Virg Bernero

Lansing Mayor Virg Bernero proudly pointed to the contrast between progressive locals and regressive feds at Monday’s announcement. BWL’s plans to get off of coal run counter to the Trump administration’s oft-stated support of coal-burning plants.

“At a time when we have climate change deniers in power in Washington, we have our local utility embracing an environmentally sustainable future for metro Lansing,” Bernero said.

BWL also announced Monday that the utility is moving its Hazel/Penn service facility to a new building on a portion of the long-vacant GM Verlinden plant on Lansing’s west side.

The move promises to kick-start economic development in both the old and new locations, and was a shiny distraction Monday, but the $500 million main event left some observers with a gassy cramp.

James Clift, policy director at the Michigan Environmental Council, felt a sense of déjà vu. “It wouldn’t be the first time we’ve seen the utility rush into a decision that wasn’t well thought out,” he said.

The rollout of a new plant has been widely expected for years, but the specifics of the project were under wraps until now.

“This is a municipal electric,” Clift said.

“We’re supposed to make decisions as a community. We’d like to know why it wasn’t more of a community decision versus a topdown decision.”

Peffley said the BWL worked with a nine-member citizens’ advisory committee for six months in 2015 and 2016 to work out its Integrated Resource Plan, or IRP. Customer surveys and informal meetings with stakeholders were also taken into account.

According to the final report, the citizens’ committee recommended one out of seven options presented by BWL and refined in discussions with the group.

Jeffrey Pillon, a member of the citizens’ committee, said Monday’s announcement was the “culmination” of that process. Pillon is director of energy assurance for the National Association of State Energy Officials.

“We were encouraging the board to take a look at how they might expand the renewables and energy efficiency, and they did that,” Pillon said.

Peffley said nearly 85 megawatts of wind will be added to the BWL’s already existing 20 megawatts of wind next year and the utility will generate 120 megawatts of solar power by 2030, “making the BWL Michigan’s leader in solar energy.”

While pushing for clean energy, the citizen’s committee also recognized the need to make up for the capacity lost when Eckert and Erickson retire, and found that gas was the cleanest option, according to Pillon.

In 2016, natural gas-fired generators surpassed coal to become the nation’s leading power source, with 42 percent of the operating electricity generating capacity in the United States.

The BWL plan falls squarely in line with statewide energy trends. In October 2017, the state’s Public Service Commission endorsed two gas-fired plants in the Upper Peninsula costing a combined $277 million. The plants would produce a combined 183 megawatts and go into service in 2019, replacing Marquette’s Presque Isle Power Plant, which is scheduled to close in 2020.

Energy giant DTE is planning a 1,100- MW natural gas power plant in St. Clair County on about 100 acres east of its huge, coal-fired Belle River Power Plant in East China Township. The new plant would provide power for about 850,000 homes beginning in 2022.

But the energy landscape is changing fast. As coal-fired plants age out of useful life, communities across the country are adopting a nimble strategy, combining renewable energy with “smaller, modular gas-fired units as you need them,” Clift said.

“If Erickson is running through 2025, when is this plant needed? Why are we rushing to build it earlier?” Clift asked. “This plant might be more than the community needs, long term.”

Lansing has been here before. In 2008, the BWL rolled out a plan for a new $1 billion plant powered primarily by coal. Clift led the charge to switch to “Plan B,” as he called it in a series of community presentations.

Blowback from community members and environmentalists induced the utility to change direction and build a smaller-scale, 100-megawatt gas-fired cogeneration plant in REO Town.

The era of “distributed” power generation from multiple, smaller sources, rather than large baseload power plants like the one BWL is proposing, has already dawned.

Renewable energy is competitive in price with fossil fuels, battery technology is swiftly improving and medium-sized businesses are already getting off the grid.

“We’re seeing many utilities that are looking to diversify their mix,” Clift said. “Even the concept of ‘baseload’ is starting to fall out of the vocabulary.”

At Monday’s announcement, Peffley said the utility’s Delta Township solar array, the largest tracking solar array in Michigan, will go on line in 2018. The utility is under contract to get 100 MW of wind power from the Thumb area, also set to go on line in 2018.

With a surge of investment in renewables, a hulking new plant may not be necessary in five to 10 years, Clift said.

“We see lots of opportunities for a cleaner mix of less risky investments,” Clift said.

“We’re not seeing a plan that is the lowest risk.”

Peffley agreed that the era of decentralized energy production is nigh, but not soon enough to avoid building a new power plant.

“Not too many years down the road, storage capacity will come into play,” Peffley said. “But there’s nothing on an industrial scale.”

The citizens’ committee advised BWL to monitor emerging technologies and re-evaluate its energy portfolio every four years, but it would be hard to reverse Monday’s big decision once the first shovel is turned.

However, Peffley said it’s “99 percent likely” that the proposed plant will be the last baseload plant BWL will ever build.

All parties agree on the environmental and health benefits of switching from coal to gas.

About 50 percent of the toxic mercury poisoning in the Great Lakes region comes from coal-fired power plants, according to the U.S. Environmental Protection Agency. Sulfur dioxide and nitrous oxide emissions, or “sox and nox,” are expected to go down 90 percent or more with the switch from coal to gas. Carbon emissions will be cut by 50 percent.

A 2011 report prepared for the Michigan Environmental Council traced 180 premature deaths a year in Michigan (and 660 in the Midwest region) to nine old coal-fired plants in the state. The Eckert plant was not included in the study, but it is “comparable” to those that were, according to 5 Lakes Energy consultant Douglas Jester. The study also traced 68,000 asthma attacks and $1.5 billion in health-related damages to the same 9 coal plants in Michigan.

But a large gas plant has its drawbacks as well.

Andrew Sarpolis, director of Sierra Club’s Beyond Coal campaign, praised BWL for deciding to close Eckert and Erickson, but he called Monday’s announcement “a long term investment in fossil fuels” that “may not be a good path to Lansing’s energy future.”

The Sierra Club is calling the BWL’s new plant a “fracked gas plant,” referring to the controversial method of hydraulic fracturing, or cracking open layers of deep rock by injecting chemicals mixed with water to extract oil or natural gas. As of 2010, about 60 percent of new oil and gas wells in the U.S. was obtained via fracking.

Fracking has turned gas into a cheap and plentiful fuel, but studies on its health and even seismic consequences have pointed to a range of harmful effects on groundwater and human health.

However, unless a utility owns its own gas field and pipeline, Peffley said, there’s no way to ensure gas hasn’t been obtained via fracking.

Jester, of Five Lakes Energy, said, “You can’t sort the molecules.”

“You’re stuck with what’s available in the pipeline,” Jester said. “They are all interconnected and you don’t get a direct delivery.”

“Right now, there is no other basket to put your eggs in,” Peffley said. “We’re not big enough to have a nuclear plant.

The only fuel supply to run a plant other than coal is gas.”

There is plenty of room for a gas plant on the Erickson site, Peffley said. The site, purchased in the 1970s was meant to house two large coal plants.

Peffley said the utility will issue bonds in summer 2018 to pay for the plant. The plant is similar to the REO Town cogeneration plant in design, only it is divided into a 170 MW combined cycle plant and two 40 MW “peakers,” or self-contained units that can be turned on quickly to back up renewables.

The “peakers” will be portable. In the event of a catastrophic failure at the BWL’s REO Town gas plant, a “peaker” can be yanked from the new plant and installed within 24 hours to back up steam generation. Up to now, the Eckert Plant has served as backup for the REO plant, but Eckert will be off-line by the time the new gas plant will be up and running.

Earlier this month, the BWL board approved a hike in residential electric rates of 3.9% for 2018, 2019 and 2020, an average monthly increase of $3.16 the first year.

Peffley said the new rate structure will be enough to pay for the plant without further surcharges.

The BWL plans to start construction in January 2019. The new plant is expected to begin operation by the first quarter of 2021.

“I’ll bet they beat that,” Peffley said. “The sooner they do, the sooner we can get out of the coal business.”

Doubts raised by Clift, Sarpolis and others concerned about the size and timing of the project may lead to another round of blowback and adjustment by the BWL.

“There are progressive voices in the community pushing us to do better, and a locally owned utility is responsive to its customers,” Bernero said at Monday’s announcement.

Along with Monday’s rollout came a second, less controversial announcement that the BWL will move its Penn-Hazel service complex at the corner of Pennsylvania Avenue and Hazel Street to a 50-acre portion of the long-vacant Fisher Body site off of West Saginaw and Stanley Street in west Lansing.

The complex is home to line and water departments, central services, fleet services and a warehouse. Peffley said the utility is moving the complex to free up the riverfront for better uses and get its equipment out of the Red Cedar River floodplain.

BWL Commissioner David Price said he hopes the new service complex will boost economic development in the west side area, particularly near its shuttered auto plants, in the same way the BWL’s REO Town cogeneration plant has helped to change the face of Lansing’s REO Town district.

Vacating the old complex, along with a sprawling lot heaped with utility poles and other equipment, frees up a stretch of prime riverfront that is already seeing a major warehouse-to-commercial conversion on the opposite bank of the Red Cedar River.

Together, the moribund Eckert station and the Penn/Hazel complex take up about a mile of riverfront property.

“That’s a lot of valuable real estate to have industrial sitting on,” Peffley said.

“Now that rumors are leaking out, we’ve had developers reach out to us already for the property,” Peffley said. “We believe Eckert and Penn/Hazel will develop into a showplace for the city, with commercial and residential.”

Peffley said the Eckert station will not be torn down. He said one developer even proposed micro-apartments to go into the Eckert Station’s three iconic smokestacks, Wynken, Blynken and Nod, but he doubted such a scheme was feasible. Developers will have to wait for the decommissioning process to play out, though. Peffley said the utility won’t issue a request for proposal until 2021, after the plant has been shut down.