TRAVERSE CITY — Traverse City Light & Power leaders are set to embark on a key conversation that will point the city-owned utility either toward or away from building a local power-generating plant.
Utility board members haven’t seriously weighed the local generation issue since they abandoned a contentious attempt to build a wood-fueled biomass plant in 2010. A discussion planned for Tuesday at 5:15 p.m. in the Governmental Center is part of the utility’s long-term strategic planning process, and is partially in response to an expiring power-purchase agreement that supplies the city with half its electricity.
“We need to get the conversation going. It’s been the elephant in the room for a very long time, ever since biomass,” said Tim Arends, TCL&P executive director.
Arends doesn’t expect any immediate decisions, but board Chairman Pat McGuire voiced slightly higher hopes. McGuire predicts board members will at least indicate which way they lean, and allow utility staffers to focus on one direction.
“Do we spend our time looking at local generation, or do we spend our time looking at long-term power purchases,” McGuire said.
Board members have not discussed a fuel source for a local generating plant. But Arends said natural gas is an obvious option for a potential plant that could produce between 30-megawatts and 50-megawatts per-hour of power.
“Anything larger and we would be in the position of being sellers of power into the grid and I haven’t seen any indication from anyone that we have any interest in that,” Arends said.
The city draws an average of 50-megawatts of power for its customers and peaks at 70-megawatts.
McGuire said he tends to veer from local power generation. A small, 30-megawatt plant loses some of the economies of scale available in larger plants that average around 750-megawatts. He’s also worried about the risk involved.
“Maybe everything looks good, but you don’t execute it well and you end up with something like the (county’s) septage plant and then you have to spend millions of dollars fixing it,” he said. “There’s a lot of risk.”
Building a plant should result in cheaper electricity than buying it from someone else, Arends said, but there are other options for cheaper electricity with less risk. TCL&P’s power purchasing consultant estimates it would be 10 to 15 percent cheaper to buy a 30-megawatt share in a 700-megawatt plant now underway downstate than for TCL&P to build its own facility, Arends said.
Some community members argue a local plant would provide the region with an economic boost, McGuire said, but he believes it would have less impact than many believe. The only local benefit would be jobs, though not many would arise from a small power generation plant.
McGuire cautioned that board members may not end up on the same path from which they begin. Further investigation may turn them in another direction, circumstances might change, or other opportunities may present themselves.
“I think (the meeting) will go in the direction of continuing to purchase power from other sources and spreading our risk,” McGuire said. “But I don’t really know ... we haven’t had a meeting where board members have expressed their opinions.”