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Grand Haven, Thursday, May 21, 2015 -- Grand Haven Board of Light & Power's Board of Directors unanimously adopted a business plan for its next fiscal year at its meeting Thursday night and made no changes to its previously approved rate structure in the process. The 2016 fiscal year begins July 1, 2015 and ends June 30, 2016. With the approval of its current fiscal year 2015 business plan last May, the Board had approved a 4 percent rate increase effective July 1, 2014. However, the BLP has experienced lower than budgeted power supply costs since the implementation of these rates and the associated savings have been passed on to customers on their bills, as a result, rather than a 4% increase, customers on average have seen only a 2% in-crease. With no additional base rate changes in the next fiscal year, and only a small increase in power costs budgeted in the business plan, BLP customers, on average, are projected to see only a 0.5% increase during this period, still less than that
originally proposed in the current business plan.
General Manager David Walters stated, "The BLP has been able to hold rates steady this year partially due to scheduling and operational changes proposed at the Sims power plant in our Fiscal Year 2016 annual business plan. After our current major outage is completed on the Sims III unit in early June, the BLP expects to operate the plant more efficiently at a higher plant output through the summer and into early fall while electrical demands and alternative purchase power costs are higher. Our plan is then to take the unit off line for a 6-8 week planned fall outage for additional preventative maintenance while purchase power costs from the grid are lower, and then return the plant to service in the winter months when the plant can again be run at higher levels, to serve higher system demands, downtown snowmelt needs, and offset higher prices from the wholesale market. At this time we are anticipating a 6-8 week spring outage as well, again to perform any necessary additional maintenance on the plant and take advantage of lower market power purchase opportunities during this period. This outage should then prepare the plant well for a scheduled 18 week run in the summer of 2016." The Sims III unit is most economical and efficient when operating at an output of 50 MW or above. The BLP average customer demand for electricity during the fall and spring periods, when the business plan is proposing maintenance outages, is well below this level.
The Sims III Unit has experienced several forced outages over the past couple of years due to aging tubes in the boiler and condenser unit, a worn and damaged outfall pipe, and pulverizer issues. These issues were addressed, along with major turbine improvements, during our current outage where the BLP invested more than $4 million dollars at the facility.
Walters stated, "Sims III is a 30 year old unit that was showing some significant wear from its long-term use. We have had the unit down since early April for a major maintenance outage. We expect noticeable improvements in its operations as a result."
Jack Smant, Board Chair added, "The elected officials of this utility have a fiduciary responsibility to maintain and protect our community's assets to ensure the future of the utility. This major outage and investment in our plant will improve the run times and efficiency of the unit and we expect our new methods of operation will improve the economics for our customers." Smant added, "We will be working to complete our long term strategic plan over the next fiscal year to assure a reliable and economical energy supply to our customers well into the future."
According to the Fiscal Year 2016 business plan, the BLP expects to collect $42.6 million in total annual revenue. The BLP is planning to use these funds as follows: $12.7 million on fuel for local power generation; $6.6 million for purchased power (including renewable energy purchases) and transmission expenses, $6.2 million for other expenses associated with the operation of its power plants, $2.3 million for distribution system expenses, $3.2 million for customer service, accounting, administrative, and general expenses, and $8.0 million to pay for its last annual principal and interest payment on the utility's outstanding debt; additional capital improvements for the fiscal year are projected to be $3.5 million and the utility will make a $1.9 million payment in lieu of taxes to the City of Grand Haven's general fund.
Created in 1896, the Grand Haven Board of Light and Power provides electricity to approximately 13,750 customers in Grand Haven and the surrounding area. Grand Haven Board of Light & Power is a community-owned, locally controlled, not-for-profit electric utility, providing responsive and dependable service to our community, while demonstrating responsible corporate citizenship and environmental stewardship.