There has been an assertion by the Mayor that Niles must have 10% of its energy be renewable based on a law passed by former Gov. Granholm.
We did some checking, and here are some facts.
SB213 does state that generators of power must have a portfolio of 10% renewable energy by 2015.
The difference, however, is that the city is not a producer of electrical power. I & M, a division of AEP, is the producer of power. Therefore, all have confirmed that there is NOT a requirement imposed on the city of Niles.
If Niles decides to come back on line and enter the power-producing business, then the dam "may" put them into this category. But the dam has been shot down since 1995.
We have verified this with AEP's legislative and regulatory affairs dept., and their comments delivered thru community relations officer Sarah Bodner.
We have also verified this with the Michigan Public Service Commission, the regulatory body that enforces this requirement c/o Christine Battiste.
The contract for the city to buy power from AEP expires in 2016. AEP cannot disclose the specifics of the contract with us for reasons of confidentiality; however AEP indicated that generally, most of thier contracts are exclusive in nature.
Editorializing and some KEY QUESTIONS we consider:
If the city decides it wants to be in the power generating business, it may need to verify this is OK with AEP. The city attorney a voiced concern over doing this last summer.
Why hasn't a large hydro company like AEP, Consumers, etc., snapped up this dam? Curious about that...
If Niles CAN , in fact, become a power-maker without breaching their contract; Would this competition from the city lead to AEP looking disfavorably on that? When it comes time to negotiate the rates with AEP, it would be logical business sense to conclude the city 'may' not get the same rates if they are also in the power-producing business; being viewed as a direct competitor.
There is a notion we heard in an interview---that restoring a dam to produce electrical power will somehow yield residents with some kind of freebie or bonus. Maybe it will significantly reduce electrical costs? Perhaps it can give the city to power itself and pass along the savings, or give the city some economic advantage to broker energy? To be clear, between 1928 and 1995--Niles residents never got some large discount when the city produced 1%-2% of it using the dam.
Or perhaps, selling the dam and getting a share of the energy revenues will turn a profit for the city. Great !!! We are eagerly awaiting the presentation and forecasts of how much actual revenue can be shared with the city on a 250 KW dam. For perspective, recall that 250 KW can produce betwen 1% and 2% of the city's power back when the population was roughly 9,000. Today, the population is approx. 12,000 people. How much money will that equate to? One forecast in a recent article claimed $220,000 per year, of which 25% would go to the city for the first 10 years of a 30 year deal. But the forecast is based on a 500KWnameplate, and the dam seldom operated above 275 KW; a couple of rare instances at 350KW.
And, if revenues from the dam buyer (and power producer) suffer because of maintenance issues, unexpected shut-downs and clean-ups due to siltation, what revenues will be left to enjoy? What happens if the company is not profitable? If the company does not succeed, what is the city left with?
Is this amount of money really worth it?
If the dam operation is profitable,--- how long it will take to get to that point. And, if Niles main supplier, AEP, will like the idea of Niles sharing with a competing company. Could that possibly affect the rates Niles gets from AEP in the next negotiation?
The current proposal ramps up to a 45% share of energy revenues. We have a feeling that 5 years from now, that won't be much. But to be fair, we await to see how much revenue is projected based on the river's flow.
Kilowatt
The kilowatt is equal to one thousand (103) watts. This unit is typically used to express the output power of engines and the power consumption of electric motors, tools, machines, and heaters. It is also a common unit used to express the electromagnetic power output of broadcast radio and television transmitters.One kilowatt of power is approximately equal to 1.34 horsepower. A small electric heater with one heating element can use 1.0 kilowatt. The average annual electrical energy consumption of a household in the United States is about 8,900 kilowatt-hours (cf the average UK household's approx 4,700 kilowatt-hours for example), equivalent to a steady power consumption of about 1 kW for an entire year.[4]
True or False:
Up Until its final shut down in 1995, The Niles dam provided free power, or discounted power to residents of Niles.
FALSE. The city simply sold it to residents at comparable market rates. So citizens achieved NO economic or utility advantage by having the dam in place.
True or False:
The Niles dam, if put back on line, will provide free or discounted power to residents of Niles.
FALSE: The plan proposed is for the city to sell to a power producing company and get a sharing of the, revenue fromat best, 350 KW generated revenue to ramp up over 3 years to 25%, 35%, and 45%.
Most people don't realize the limited power capacity of this dam, and how much might be to gain from its sale.
Question:
But what if Niles brought it back and retro-fitted its parts.....you know....."souped up" the engine?
Ultra-Modern technology would be required. Neither of the proposing companies posses this equipment as they have proposed, thus far. A method of regular sediment removal would also be required to prevent turbine damage.
The proposing companies 'may' not have taken this matter into account, but readers here may recall that its been determined that the Dowagiac, though a high-quality stream, is gradually producing more and more tons of sediment per week. Sediment is the #1 enemy of dam turbines.
Previous attempts to bring the old dam back on line were interrrupted on a regular basis by the need to clear and flush sediment from this equipment. As communities grow and develop, a common place for rain run-off and agricultural runoff to seek out? Is the river. Natural drainages disappear, and the river begins to handle more 'urban' runoff and sediment.
How do the proposed companies plan to deal with this fact? We will update the answer here if we get it on Feb. 28th.
Paterson Electric, from Albuquerque, New Mexico is one company proposing a deal with Niles. The other "allegedly" is Hope Renewable Energy, LLC, from Grand Rapids, MI
Who is Hope Renewable Energy?
I will give $20 cash bounty to the person that can produce a company overview or some literature, or anything publicly available on Hope Renewable Energy LLC from Grand Rapids, MI.
There is a concern about Hope Renewable Energy thus far. Despite searching under several listings, we cannot come up with a phone number for this firm, nor a website after numerous changes and versions of the name. We also contacted the MPSC to see if they are licensed to produce power. Our team sent several e-mails to the person representing Hope proposing the offer to Niles (which was a private, consumer e-mail address ending in *******@charter.net ) we have received no responses to a request for information on their firm, or a clarification on the company name, phone number, or website.
Without going off on a long tangent here, we are questioning how the city stands to profit on a dam that has meager output potential in the first place. We will be intrigued to hear how these companies propose to operate profitably on such small output, and then will turn around and share the revenues or the electricity with Niles. They are facing a daunting repair bill for many structural and equipment needs.
They are also facing a different regulatory environment that is more rigid than it was in 1928. None of our group is in the power business, so perhaps this is easily dealt with and we seek to understand this component better.
However, if the above challenges are easily dealt with, we have wondered why larger firms haven't jumped on this little beauty that has stood idle and degrading for the last 16 years. We know the quotes involve equipment repair, restoration of damaged turbines, a tilted powerhouse ( the big red building which cannot currently support equipment due to being tilted), The cost just to re-enter the dam into the game is huge. Perhaps companies like this are a super-specialty niche business. Perhaps they are a dying breed, grasping to obtain an increasing share of a diminishing market as dams all over the US outlive their usefulness.
We will be adding more details from this post after continued interviews with Niles City Utilities officials, or if we ever learn more about Hope Renewable Energy.
What will the dam owners do with the park and land that are immediately upstream and downstream?
At what cost?
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