FAQ

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Why do you think we need additional power generating capacity in our community?

Even by the most conservative estimates, our growth in demand for electrical power will outpace our capacity for supply in the next four to 10 years. In addition, while our current infrastructure has and continues to serve us well, it is aging and it is not as efficient or clean as technologies that are available to us today.  We need to plan for its replacement.  

We believe our community must take a multifaceted approach to meeting our future energy needs.  We need more emphasis on effective conservation measures and renewable energy resources. At the same time, we need to develop new, cleaner-burning resources for capturing the benefits of traditional fossil fuels.

What kind of economic and population growth are you projecting for our community in your future power estimates?

The Michigan Public Service Commission performed an energy assessment for the State of Michigan called the 21st Century Energy Plan,  which was released in January, 2007.  For the Western half of Michigan, the study predicted a 1.4 percent annual growth.  To be conservative, the Holland Board of Public Works is using a 1.3 percent annual growth for our forecasts.

To see the MPSC study in its entirety, visit:
http://www.michigan.gov/documents/mpsc/21stcenturyenergyplan_185274_7.pdf.

How much more power will we need in 2020 than we need today?

In 2006, the Holland Board of Public Works experienced a peak hourly demand of 235,400 kilowatts.  This eclipsed the previous all time high demand set in 2001 by approximately 4000 kilowatts.  Using our forecasts for future growth, we may expect to see demand levels surpassing 280,000 kilowatts by 2020. That’s an increase of nearly 20 percent.

Also, it is important to note the make up of that power supply.  Over the past few years, coal has supplied approximately 60 percent of our customers’ needs.  The remainder of the needs have been served by either natural gas or from wholesale power purchases from other utilities. By comparison, the customers of utilities in Michigan receive on average 83 percent of their supply from coal and nuclear resources and only 17 percent from natural gas sources.

The cost of buying power on the open market has become extremely volatile in recent years, as the price of natural gas in the U.S. has more than doubled over the past decade. The demand for natural gas is expected to continue growing rapidly, which will provide continuing upward pressure on the cost of electricity that is gas-generated.

When you compare the costs of coal to renewable resources, how are you factoring in the huge increases expected in the price of coal due to rising global demand and environmental compliance expenses?

There is no escaping the fact that surging global demand for energy is going to continue driving costs higher.  However, the U.S. Department of Energy (DOE) in a January 2008 report projected that coal is expected to maintain a sizable cost advantage over natural gas.  Today, the price per unit of energy from natural gas is over four times greater than the equivalent amount of energy from coal.  In 20 years, the DOE projects this advantage for coal will remain strong, with energy from natural gas still being priced over three and a half times the price of energy from coal.

The costs of environmental compliance are difficult to predict.  Currently, there is no regulatory program or legislation in place to address CO2 emissions.  If, at some point in the future, some form of regulation is put in place, it will affect the entire electric industry.  Newer power generating facilities will have an advantage over older infrastructure due to the increased efficiency newer technologies offer.  Our projections for costs of a new resource have factored in the current compliance costs as well as projections of potential CO2 emission costs.

Isn’t having our own power plant a luxury we can no longer afford?

We believe that ownership of our own power resources is a necessity we can not afford to do without.  If we do not own our generation resources, we are left with the option of obtaining power from other producers who do own their resources.  Instead of using the cost advantage of having a municipal, non-profit corporation finance the building of generation, we will be funding corporate investment in plants through wholesale power purchases.  The rates we would pay for our energy would not only fund the recovery of the plant cost, but also will be high enough to support an adequate return to the stockholders of those generation companies.

We already buy much of our electricity from somewhere else, why can’t we just continue to do that?

As an electric provider, we are required to secure enough generation resources, either through ownership or purchases, to support our customer demand plus an additional 15 percent.  This 15 percent is called a “reserve margin”, and it is there to protect the wider electrical grid from collapsing in the case of a loss of a few generators. In 2006 our region, the Midwest, had an overall reserve margin of 18 percent, down from 22 percent the year before. That means there isn’t a lot of “extra” generation to go around. There is going to have to be additional capacity to cover increasing demand. We can create that capacity ourselves, with the advantages of a municipally owned BPW, or have someone else do it in the open market. In that case, our costs will include the power supplier’s need to provide a financial return to outside shareholders. Needing to secure electricity in an open market makes us vulnerable to energy speculation, which drives up the cost of electricity, similar to what has happened in the past in California and other states undergoing electricity deregulation.

If we build a coal plant, can it eventually use other fuels, such as bio-fuels, as they become more commercially available?

With technologies available to us now, the option of developing a coal resource in Holland will allow us to blend in alternative fuels such as wood waste and bio-solids—which are renewable resources.  In addition, the resource would be designed to capture additional waste heat to increase the snow melting district and possibly use it as a building heat source.  Both of these uses would offset the use of fossil fuels, either from vehicles plowing snow or natural gas in heating the buildings.  This truly would be a very efficient and clean use of coal.

If you were to build a new facility, how would it be different from what we already have?

One option we are studying is a 78 megawatt circulating fluidized bed boiler coal-fired electric generating unit. It would replace an 11 megawatt pulverized coal resource that was installed in 1953.  Even though the new unit would be seven times the size, it would result in an overall reduction in emissions of sulfur dioxide and oxides of nitrogen. In addition, the new resource would result in less emissions of mercury, particulate matter and carbon dioxide per unit of electrical output.

With a circulating fluidized bed (CFB) boiler, the unit would also be able to combust biomass fuel sources in addition to coal. We would be able to burn the bio-solids from our wastewater treatment facility.

This resource would also increase the snow melting capacity and allow the expansion of the snow melt district. We would see the new resource not only as an effective power supply solution, but also as a resource that can integrate into the community to provide additional benefits.

How do you calculate our future needs, and how accurate have you been in forecasting need over the past 30 years?

We strive to do the best we can to understand the demand growth in our utilities. We periodically perform econometric demand forecasts which evaluate the demographic and economic factors that influence electric consumption. Our previous forecasts have been quite accurate.

Though times today are much more uncertain, we still must use the best information we have. As mentioned, the Michigan Public Service Commission estimates a 1.4  percent annual load growth for areas of the Lower Peninsula outside of Southeast Michigan.  We believe that by adopting a 1.3 percent annual growth, we are being conservative. This is especially true given Holland’s track record at outpacing the rest of West Michigan.

With our prolonged flat economy, soaring energy costs and people leaving the area, how can we possibly say we need a new power plant?

Developing and constructing electric generation resources is a process that takes many years to complete. Our approach has always been to make decisions that are the best for the long term.  We have built resources as our demand has increased in a way that demonstrates a conservative approach and avoids overbuilding. We currently have nine different generation sources which use a mix of fuel types. This diversity has allowed us to minimize risk and to build in resources in a way that minimizes financial burden to our customers. To continue that level of success, we need to make decisions and take actions very soon to plan effectively for the future.

With global warming and air pollution, everyone is saying coal power has to end. Why would you even consider it now?

Without new coal generation, our reliance on natural gas will continue to grow.  Natural gas prices have already proven to be much more volatile than coal.  This volatility will be even more so if we solely rely on it for our new traditional plant options.  While coal is an abundant domestic resource with over 230 years of proven reserves, gas production capacity is less certain and will likely need to be supplemented with imports of liquefied natural gas (LNG) from other countries.  The national infrastructure needed to not only deliver the domestic supplies of natural gas but to also provide for the receipt of LNG at our ports is in need of significant expansion if we are to use more and more natural gas.

We do believe that renewable energy and conservation can help.  We are working on several options that will put these sources into our portfolio of resources.  However, traditional plants will still need to be deployed to stabilize and provide the base-load support to the system.  Our goal is to make those sources the best they can be.

We have the technology and the wind power to meet our needs with wind, why don’t we take that path instead?

We don’t have the technology to meet our power needs with wind. Wind, along with other renewable energy sources, will play an important role in meeting the future needs of Holland Board of Public Works customers.  We are currently working with the City of Wyandotte on developing a five wind turbine project site.  If successful, we could end up owning some portion of that project and import the power into Holland. We also continue to investigate opportunities to participate in a large wind farm with good wind energy availability.

With the State of Michigan considering a renewable portfolio standard of 10 percent or more, it would take 45 wind turbines just for Holland to meet its obligations. Obviously, we are going to have to secure other forms of renewable energy as well.  And we are doing just that.  Through our municipal joint action agency, Michigan Public Power Agency, we will be receiving landfill gas generation under an arrangement with Granger Corporation.  In addition, we are working out final details with the Grayling Generating Station, a wood-fired generator for a purchased power arrangement.

Finally, in an attempt to help our customers understand how they might be able to deploy renewable resources at the residential and small business level, we are creating a demonstration project of smaller scale wind resources at the Holland Civic Center and the Farmer’s Market area.  There residents will be able to see smaller scale resources in action and review key information about those resources in a kiosk with an interactive display.  We hope to have this in place by the end of 2008.

What about the mercury and other pollutants that come from coal plants? Why can’t we move on to cleaner alternatives?

Developing a new plant would be a cleaner alternative.  The plant under consideration will have specific controls for mercury capture and achieve 90 percent removal.  It would be the first plant in Michigan to have this technology deployed on its entire exhaust stream.  As a result, we would limit annual mercury emissions over a 100 square-mile area to less than two ounces per year. An independent toxicology assessment of these levels—in findings reviewed and acknowledged by the Michigan Department of Environmental Quality—was that the risks posed are “well below any level of concern.”

Have you really considered renewable power, or have you had your mind made up from the beginning?

Renewable power will be an essential part of our energy future. For every kilowatt of power we can generate from renewable resources, it will be one kilowatt less that we will need to generate from carbon-based fuels. Our commitment to renewable resources is sincere, and as mentioned, we already have a number of exciting initiatives under way to make renewables a reality for the Holland community. We believe the best solution for our community is in the combination of renewable energy, effective conservation and a clean, efficient base load generating resource.

Besides the BPW projects, where are the other proposed coal-fired power plants going to be located in Michigan?

We know of six other proposed electric generation plants that would use coal as a fuel source. The plants vary in the combustion technologies they will use, and they include:

  • LS Power is proposing to build a supercritical pulverized coal plant in Midland.
  • Consumers Energy is proposing to build a supercritical pulverized coal plant in Essexville.
  • Wolverine Electric Power Supply Cooperative is proposing to build two circulating fluidized bed boilers at a plant in Rogers City.
  • Northern Michigan University is proposing to build a circulating fluidized bed plant in Marquette.
  • Tondu Corporation is proposing to build an Integrated Gasification Combined Cycle plant in Filer City.


The Holland Board of Public Works is in active communication with these companies via the Michigan Public Power Agency (MPPA) in order to keep abreast of the potential partnership options they present. The earliest these plants are expected to be online is 2015.

What is being done now to ensure the lights don’t go out in Holland in ten years?

The air permit application for the James De Young expansion option has been submitted and is under evaluation by the MDEQ. This permit application was prepared in tandem with the decision making process in order to keep the James De Young expansion as a viable option, mainly due to the long lead time required to get a permit approved. Under the current schedule, issuance of the permit is expected some time this summer. Upon issuance of the permit, the Holland Board of Public Works would have 18 months to begin construction or obtain a permit extension.

The decision timeline for an in-state partnership will be driven solely by the development plans of the utility company partner and timing of their request(s) for commitment from the Holland Board of Public Works. A projection of what this timeline could be is not possible at this time due to the number of variables.

Currently, approximately 40 percent of our customer’s energy needs are served by purchasing energy supplied on the open market. These supplies have demonstrated volatile shifts in pricing in recent years due to the high and fluctuating cost of natural gas. Thus the longer the Holland Board of Public Works has to purchase energy on the open market, the more our community is exposed to potential rate instabilities and increases.

Given the importance of the waterfront to the long-term future of Holland, why can’t the whole power plant be moved to another location?

There are many issues that must be considered when developing a new electric generation resource.  The site that is chosen must have adequate access to water for cooling, fuel delivery capability, be near electrical transmission and be connected to roadways that would support bulk material and heavy equipment deliveries.  Fortunately, the site where the existing James De Young Station is located meets all of these needs.  In addition, the site is already developed so that we would not have to disturb a Greenfield site to construct the plant.

There are some key distinctions that support a plant located at the current waterfront site.  Because we receive our coal shipments by lake vessel, we not only help ensure the harbor maintains its commercial status, but we also avoid needing significant space for rail spurs and coal unloading equipment.  Further, the current location allows for connections between the wastewater treatment plant for cooling water usage and bio-solids disposal as well as a tie to the downtown area for a snowmelt district.

What options are left for the downtown snowmelt system and dredging of the channel if the James De Young station is eventually retired? Costs?

Downtown Snowmelt System— To provide an estimated annual cost of an alternate hot water source for the downtown snowmelt system, we evaluated the installation and operation of an industrial boiler. The annual cost for the industrial boiler system was estimated at $830,345 more than the existing system fed by the James De Young station’s waste heat.

Channel Dredging— The U.S. Army Corp of Engineers evaluates the annual tons hauled through a harbor and the criticality of these loads to determine which harbors will receive federal funding for dredging operations. Consequently, a reduction or removal of the tons of coal shipped to Holland could put our current dredging funding at risk, which is money that would then have to be replaced via local sources. To date our research has produced a summary of the annual outer harbor dredging costs from 1985 to 2006, with the 2006 cost coming in at $233,253. The most recent available data for the periodic dredging of the inner harbor was $1,033,070 in 2000.

What will you do if environmental groups or others sue to stop you from building a new plant?

We will conduct a full and open dialog within our community about the challenges we face in our energy future, and the solutions we feel are right for the community. Ultimately, the decisions we make must be those in the best interests of the community.

While we respect the viewpoints that others outside the community might hold, we believe that decisions about a community resource must ultimately be made locally. Our belief is that our community would share this position, and with their support we would make the decisions needed to provide the Holland area with a clean, reliable and affordable energy future.