The BLP understands and agrees with the core desire of local businesses and residents that affordable rates are critical to the economic success of our community. We have worked hard to engage and inform our customers about how affordability has been a principal goal in our planning, but we understand there are still a few misunderstandings around the impact of bonds and the former Sims site redevelopment plans.
There are three core mischaracterizations in particular we would like to address:
- The BLP is not replacing Sims with a natural-gas fired local generating plant (the CHP), but is developing a diversified power supply portfolio supplemented to an extent by the proposed combined heat and power (CHP) units that will only operate when costs are higher from elsewhere.
- The BLP capital investments and bond issue need to be placed into the context and perspective of the total operating revenues expected over the amortization period of the bonds and the size and scale of the overall power supply portfolio. In actuality, the CHP is a very small piece of a much larger pie, and we are concerned lobbyists have exaggerated its impact to community members.
- The BLP’s current rates are competitive, most often lower than Consumers Energy, and they will become even more competitive going forward. The BLP and City Council have spent the last three years, since the announcement of the closure of the Sims power plant, studying, evaluating, and developing our transition to a diversified power supply portfolio.
The premises highlighted by some community members who are concerned with BLP’s plans run contrary to the findings of the BLP and its independent engineering, architectural, financial, and power supply advisors reviewing and evaluating our future alternatives. The BLP is unaware of any evaluations conducted by any local businesses or lobbyist groups to support their conclusions.
The BLP is not replacing Sims with a natural gas-fired generating plant. The BLP has, since the closure of Sims, purchased 100% of capacity and energy needs for the system from others. The proposed plan of the BLP will supplement these purchases with a Combined Heat and Power (CHP) plant that can be run when prices from the regional wholesale marketplace are higher or it is less expensive to produce heat (and electricity) for the City’s snowmelt system. If spot energy prices during peak load conditions do not exceed the cost of operations from the CHP, it will not run. It is projected that the plant will pay for itself as a call-option during these peak times and as a “capacity hedge” in helping us to meet our state-mandated standby resource requirements.
It’s important to see the full perspective when examining the scope of the proposed generation project in comparison to the BLP’s overall power supply portfolio and level of system operating revenues projected over the life of the $45 million bond issue. For relative comparison purposes, the projected operating revenues of the BLP over the next 20 years is approximately 1 billion dollars. The payment of debt service on a bond issue of this size represents a commitment of approximately 6% of BLP projected operating revenues over the 20-year bond amortization period, and the project and bond issue supporting it are expected to lower required operating revenues over this period, not increase them. This means it will be a positive financial investment for our community.
Finally, BLP’s current rates are competitive, and most often lower than those of Consumers Energy. The BLP would be pleased to provide a bill “calculator” program for both Consumers Energy and the BLP to any of its customers to validate our claims. In addition to a 6% rate decrease over the past five years, BLP overall rates will again be reduced effective July 1, 2021 and the Board has committed in its approved five-year strategic plan to maintain rates, improving our competitiveness, over this period. Consumers Energy, on the other hand, has now filed for another rate increase, on top of that effective January 1, 2021.
We encourage our customers to review the information we have provided at GrandHavenPower.org or to reach out to us directly with any questions they may have about the BLP’s future energy plans. Please find contact information on our main website.