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Traverse City’s Utility Goes Greener

Instead of new coal power, firm plans big jump in renewables

May 20, 2009 | By Glenn Puit
Great Lakes Bulletin News Service

Credit Traverse City Light & Power
  Traverse City Light & Power built Michigan’s first utility-scale wind turbine in 1996.
TRAVERSE CITY—As three Michigan utilities await decisions on their applications to build new coal-fired power plants, this Up North town’s municipally owned utility is earning high praise for heading in the opposite direction.

Traverse City Light & Power, which serves more than 11,000 customers in and around this small, northwest Lower Michigan city, has announced that it will generate 30 percent of its energy from renewable sources, instead of coal, by 2020.

TCLP’s renewable energy goal, apparently the most ambitious of any utility in Michigan, essentially triples the one that state lawmakers set for power companies last fall. TCLP officials told the Traverse City City Commission that their company, the first in the state to erect a commercial wind turbine, is now investing in a wind farm in Charlevoix County and planning to build up to five biomass-burning power plants in the Traverse City area.

The announcement came as the debate over Michigan’s energy future continues in Lansing, where state environmental and utilityagencies are evaluating applications for coal plants proposed for Rogers City, Holland, and Bay City.

Clean-energy advocates strongly oppose the coal rush, which began several years ago and at one point involved eight different proposals for new coal plants even though energy demand in the state was declining. Fueling the debate over the remaining three proposed plants is Governor Jennifer Granholm’s aggressive campaign to drastically cut demand for electricity and bring tens of thousands of new, clean-energy jobs to the state. Also adding to the controversy are the high cost of new coal plants and the Obama administration’s drive to regulate CO2 emissions from power plants, a primary cause of climate change, and make the country a leader in the emerging, worldwide, renewable energy economy.

Given how strongly many state lawmakers support new coal plants, and the insistence by most utility officials that new coal power is essential to their future plans, TCLP’s announcement is startling, energy policy experts say.

It drew a cheer from Glenn Cannon, a former utility executive who once directed the American Public Power Association, which represents the nation’s 2,000 community-owned utilities.

“Thirty percent renewables is huge,” Mr. Cannon said. “Outside of utilities that are lucky enough to have major hydroelectric resources, this is one of the most aggressive goals I have seen. I am especially proud of them.”

Traverse City City Councilman Chris Bzdok, who heard the municipal utility’s presentation, sounded even prouder.

“Light and Power’s goals are so far ahead of the investor-owned utilities that really, all you can say is ‘Atta boy!’” Mr. Bzdok said after the meeting in the city commission’s chambers. “The notion that they are not looking at 10 or 11 percent rate increases, that they are looking at a diverse potential portfolio of renewable energy: It is the big difference that you get when you have a public power agency that is responsive to its public. ”

Finding a New Path
A series of recent events turned TCL&P toward using more renewables than state law requires.

One was Governor Granholm’s recently announced goal to reduce Michigan’s reliance on fossil fuels for making electricity by 45 percent by 2020. The governor issued several orders that would help the state reach that goal by, among other things, installing efficiency measures that would sharply cut the demand for electricity.

She also directed the state’s environmental and utility agencies to look closely at the need for—and economic and environmental wisdom of—building new coal-fired plants.

“That basically means that no new base-load coal plants are to be built in Michigan unless there is a significant review of them...to basically justify why renewables or conservation wouldn’t offset those plants,” Ed Rice, TCLP’s executive director, said of Ms. Granholm’s comprehensive set of orders and directives, which were released during her State of the State address, on February 3. “What will probably occur, if that goes forward, is that all public utilities will be forced to buy generation from adjacent states.”

Mr. Rice said that TCLP wants to avoid that by using renewables to make as much of its own energy as possible. He added that both wind and biomass generation would create local jobs and give the utility some extra energy independence.

The utility director made the announcement in a presentation to the City of Traverse City Commission and his company’s board of directors. He said a storm of events, mostly surrounding the economic cost and environmental costs of burning coal, led to his firm’s decision to head in a different direction.

“These are very challenging and critical times for everyone involved in the electric utility industry, and this is especially true with TC Light and Power,” Mr. Rice told the officials. “Light and Power is at a juncture where decisions that are made in the next one to five years will have an impact for the next 30 to 40 years for our citizens, our region, and the area.”

Point by Point
In addition to Governor Granholm’s orders, the events that led TCLP to turn more strongly to renewables, Mr. Rice said, include:

  • Passage of Public Act 295, which requires that at least 10 percent of a utility’s power comes from renewables by 2015. The act allows utilities to raise rates slightly to fund renewable electric generation and provide customer energy optimization initiatives. “Under the law, we are mandated for the first time to have oversight by the Michigan Public Service Commission,” he explained.

  • Passage of Public Act 225, which mandates utilities to install energy efficiency program for its residential, commercial and industrial customers. “This is a brand-new process for electric municipals,” Mr. Rice said.

  • Plans by the federal government to implement a carbon cap and trade program, which Mr. Rice said will cause “new base-load (coal) generation to be subject to a much higher cost.”

  • Increasing public demand for clean energy. Mr. Rice said his firm solicited opinions from the public in forums, through ratepayer surveys, board meetings, emails to the utility’s Web site, and direct communications with board members.

“What came out of this is that the ratepayers and residents have indicated they want reliable, low-cost electricity generated from local, environmentally friendly sources,” Mr. Rice said. “With this input, and the need to address state and federal mandates, the strategic plan was developed.”

Mr. Rice said that work on the Charlevoix wind farm is well underway, and that TCLP is just starting to assess where the best locations for the biomass plants would be. He said those proposed facilities will be in the immediate Traverse City area, and that the number of plants will depend on the need for power in the future.

As the Michigan Department of Environmental Quality continues to review applications for the three coal plants proposed for Michigan, Mr. Cannon, the former utility executive, said other utilities should be taking note of TCLP’s leadership on the controversial issue of clean versus coal power.

“TCLP is not the largest utility by far, but is speaking with a large voice in environmental stewardship by their commitment to renewables and energy efficiency,” Mr. Cannon said. “They should be applauded for their leadership, and will hopefully be aggressive in implementation. Their customers should be proud of their public power system. It is a strong investment in their future and should provide a benchmark for other utilities to follow.”

Glenn Puit is a policy specialist for the Michigan Land Use Institute. Reach him at glenn@mlui.org. Traverse City Light & Power’s Community Investment Fund recently awarded the Institute a grant to aid in the production of its upcoming Community Guide to Energy Efficiency.

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