TRAVERSE CITY — Traverse City Light & Power officials will tilt away from paying more for green energy as they attempt to find new electricity sources to replace a contract that provides the utility up to 35 percent of its power.
Officials with the city-owned utility will seek bids to replace power now provided by the Lansing Board of Water and Light under a contract that expires at the end of 2015. New contracts could affect rates, and board members this week said they would like more renewable energy supplies such as wind and solar, but not at a premium cost.
"More renewable would be nice, but we don't want to subsidize it," said board member and city Commissioner Barbara Budros.
Board Chairman John Taylor said he would be willing to pay more for renewable energy sources, but acknowledged he couldn't define the "sweet spot" where renewable energy costs remain palatable.
Tim Arends, TCL&P executive director, said board members gave him and the utility's consultants enough direction to begin piecing together bid requests.
"They are willing to pay a little above coal or gas, but nothing that significantly impacts rates," Arends said.
The board approved a small rate increase this week that followed an uncapping of power costs in the fall. Together, the two rate bumps will increase customers' utility bills by 10 to 15 percent. Several board members said keeping rates low and affordable remains their priority when considering future contracts.
Renewable energy sources already comprise about 12 percent of the utility's power supply, a figure that exceeds the state-required minimum. The percentage should increase to 14 percent to 15 percent from electricity generated by landfill gas over the next year, Arends said.
But utility officials also have been burned by jumping too quickly into renewable energy. They purchased a 20-year contract to buy wind energy from the Heritage Stony Corners windmill farm four years ago at the price of 11 cents a kilowatt.