Plans for $27M power plant dropped by Grand Haven Board of Light and Power

Plans for a $27 million power plant in Grand Haven have been dropped by the Board of Light and Power. This rendering of proposed public space, foreground, shows the previously proposed heat and power plant on Grand Haven's Harbor Island. (Image by Grand Haven Board of Light and Power)

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GRAND HAVEN, MI – Plans for a $27 million power plant in Grand Haven have been dropped by the Board of Light and Power, which cited community opposition as the reason.

The backup “peaking” plant was to provide electricity when costs of purchasing it on the open market rose, as well as to provide heat for the city’s downtown sidewalk snowmelt system.

“We’re a community-owned utility,” Grand Haven BLP General Manager Dave Walters told MLive. “If the community doesn’t want us to do something, we don’t want to do it.

“At the end of the day, it doesn’t make that much difference to us.”

Plans for the gas-fired electric generating plant on Harbor Island began three years ago, prior to the 2020 closure of the J.B. Sims coal-fired power plant that was demolished early this year.

But significant community opposition to the expense of the 12.5-megawatt plant surfaced and grew stronger, with calls for an independent study to determine its need and greater use of alternative energy sources.

The BLP voted last week to abandon the peaking plant plans that Walters said it has spent about $1 million developing.

“We’re fine with this route if this is what the community wants us to do,” Walters said. “There are problems that may be more difficult than some thought, but now it’s on somebody else’s plate.”

Among those is how the city will heat the sidewalks.

Five large hot-water heaters were purchased by the BLP last year for $1 million and were fueled by natural gas to heat the sidewalks, Walters said. A mild winter reduced anticipated operating costs from $150,000 to $65,000.

The plan had been to use excess heat from the now-canceled generating plant to help power the boilers, and the city and the BLP will need to determine how the boilers’ costs will be covered, Walters said. The boilers likely will be transferred to city control and responsibility, he said.

It was estimated the city would have saved $50,000 to $60,000 annually in snowmelt heating costs, he said. The city passes some snowmelt costs on to downtown merchants.

The BLP last week approved a notice of intent to issue $28 million in electric revenue bonds to pay for the $5 million cost of the Sims demolition, the new hot water heaters, $4 million in improvements to a substation on Harbor Island, repairs to other substations, meters and other improvements to the electric distribution network.

The Grand Haven City Council is expected to approve that notice of intent when it meets Monday, Sept. 20. Walters said those bonds likely will be 10-year notes.

An earlier intent to issue $45 million in 20-year bonds, which would have paid for the new plant, has been withdrawn.

The reduction in bonds does not mean there will be the equivalent amount in savings since BLP customers still will be responsible to pay for the energy the peaking plant would have provided, Walters said. He likened the move to switching from a mortgage to a lease.

The prediction had been that the peaking plant would have saved city residents $5 million in electricity costs over 20 years, he said.

Since Sims went offline in February 2020, the BLP has been purchasing electricity from other sources via the Michigan Public Power Agency – a process that has gone more smoothly than anticipated, Walters said.

The idea behind the backup peaking plant was to diversify the BLP’s power supply along with renewable energy sources such as batteries and solar panels. Installation of batteries and solar panels were part of the BLP’s long-term plans for Harbor Island and though they likely will still be pursued, they probably wouldn’t be installed on the island, Walters said.

What to do with the island will become another decision for the city council.

“The cancellation of the project takes the BLP out of some of those decisions and inserts the city council and city manager into that leadership role in doing some of those things,” Walters said.

The peaking plant proposal turned political with the election this year of new members to the BLP. The plant was the main topic of debate when Grand Haven voters in August trimmed five candidates for the board to four. Voters in November will fill two seats on the board currently held by President Jack R. Smant and John F. Naser, who are not seeking re-election.

Voters also will select a mayor and two Grand Haven City Council members in November. The Grand Haven City Council would have had to sign off on the bonds to finance the peaking plant.

Toxic PFAS compounds – so-called toxic “forever chemicals” -- were discovered in groundwater on Harbor Island earlier this year. Walters said the PFAS is related to earlier uses of the island – including a community dump – and not to operations of the power plant.

Testing and monitoring of PFAS continues, as do talks about how to remediate it. The BLP is spending $12.5 million in cash reserves for remediation of environmental issues related to Sims, including the burial of coal ash on the island. The PFAS discovery has led to discussions about removal of more coal ash than the BLP was intending.

“(The PFAS discovery) made developing that site that much more difficult in an environment where it wasn’t that popular of a project in the first place,” Walters said.

A citizens group, the Grand Haven Energy Organization, has vigorously opposed the construction of the new plant and has gathered more than 1,000 signatures on a petition opposing the plans. The group believes the new plant is an unnecessary expense and that more emphasis should be placed on renewable energy sources.

Some of the community’s most prominent industrialists signed a letter to the Grand Haven City Council protesting the BLP’s plan to sell the bonds, which they believed would increase business expenses to the point where they would be “even more uncompetitive.”

The process for obtaining an air permit for the now-dropped power plant is continuing through the state’s channels. The Michigan Department of Environment Great Lakes and Energy is taking public comments on the permit, which Walters is confident will be issued.

The BLP decided to go forward with the permit because it had already paid for it, he said. The permit – and the now-abandoned plans for the power plant – will be placed on a shelf in case officials want to resurrect them later, Walters said. The permit would be good for 18 months, and renewable for another 18 months, he said.

However, Walters made it clear there are no plans to take the plans off the shelf anytime soon.

“We have no intentions of going back,” he said. “We’re not pursuing the project. We’re canceling it.”

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