MARQUETTE — Last week, an administrative law judge gave his opinion to the Federal Energy Regulatory Commission, stating that Wisconsin Energy has been overcharging U.P. ratepayers to operate the Presque Isle Power Plant. Officials with Cloverland Electric in the eastern U.P. were pleased with the judge’s opinion, but the company’s president and CEO is still concerned about the U.P.’s future energy situation.
The Presque Isle Power Plant is one of 25 coal plants in Michigan scheduled for retirement come 2020. The plant, currently owned and operated by WE Energies, does not supply power to the eastern U.P., but people there and across the U.P. are paying to keep the plant operational. A System Support Resource agreement- or SSR- is handled by The Midcontinent Independent System Operator, or MISO. SSR requires a power plant to continue to operate in order to maintain electric reliability in a region, such as the case in Marquette with the PIPP and SSR payments.
“Everybody in the U.P. has to pay these,” said Cloverland Electric President and CEO Dan Dasho. “They all have to pay a fee.”
Officials at Cloverland are gearing up to pay $11.7 million over a period of 14 months — that’s $835,000 in SSR payments every 30 days — for running the Presque Isle Power Plant for a period of one year.
“The difficulty for us is we’re a good size load in the U.P. and that cost came at us. It’s a big cost for our ratepayers and really we didn’t get any of the benefits. And now all of a sudden, here come all of these added costs,” Dasho added
While Cloverland and WE Energies await a decision at the federal level by FERC, there’s something at the state level Dasho is very concerned about.
“We are hurt by what happened in 2008 when that exemption came into play,” said Dasho.
Dasho is referring to an exemption passed by the Michigan Legislature eight years ago, known as the ore mine exemption. It allows mines in Michigan to move their entire electric load to another supplier.
“A lot of people say, ‘boy, you gave a special benefit to one company.’ The flip side is under the current legislation, only one company wasn’t able to exercise choice without that amendment,” said State Rep. John Kivela, D-Marquette. “It gave Cliffs an option that every other company in Michigan had.”
“We’re very much afraid a few years from now we’re going to be paid with new SSR payments that are even bigger,” said Dasho. “If things go wrong, those costs will be dumped on the U.P., which is why we want to get that language out of the energy legislation.”
In a statement on its website, Cloverland Electric says ‘Lansing and the Governor (Snyder) have shown no interest in removing this exemption.’ With the power plant closing in four years, there are talks of a new natural gas power plant to take the coal burning plant’s place. Dasho is worried that these SSR payments could return if a new plant is built.
“If anything goes wrong with it and SSR payments come back in because the mines in the future decide to exercise the ability to leave, then the Upper Peninsula is going to be stuck with paying all of those costs. And it’s just like, you’ve got to be kidding me,” said Dasho.
“There’s a lot of noise being made about it, but keep in mind that Cliffs is back purchasing their power from the Presque Isle Power Company,” said Kivela. “These SSR Payments aren’t being dictated by the fact that the amendment is in there because Cliffs is back where they are.”
According to Dasho, a new power plant in Marquette could cost $300 million or more.