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May 27, 2010

Forum: Raising the bar on energy plants

BY TOM KARAS ----

Wolverine Power Supply Cooperative received bad news last Friday: The state denied the company a permit for its proposed Rogers City coal plant.

The decision should have surprised no one.

The state based its denial on a Public Service Commission finding that the Rogers City plant was not needed and that it would push the price for co-op members' electricity from about 9 or 10 cents to more than 20 cents per kilowatt hour — higher than any place in the country except Hawaii.

The question now is what happens to the $70 million Wolverine sucked out of its members and the northern Michigan economy and deposited in an "energy development fund" to launch this folly. Wolverine already has spent more than $28 million from the fund. Gone.

Of the $70 million, Cherryland Electric Cooperative members kicked in $11 million; how much good could have come from keeping that money local?

Wolverine should have known better. In December 2007, I worked with a specialist in utility financing and rates. T.R. Rose & Associates concluded that, conservatively, the delivered cost of power from this plant would be 17 to 19 cents per kilowatt hour — very close the Public Service Commission's number.

Wolverine never responded and completely ignored the report. The company just kept plowing other people's money into a bad idea that was clearly too expensive.

But what did Wolverine care? Officials there are only accountable to their board of directors and knew they never would be questioned.

They counted on local, elected leaders behaving the same way. State Sen. Jason Allen, R-Traverse City; state Reps. Wayne Schmidt, R-Traverse City, Kevin Elsenheimer, R-Kewadin, and Rep. Andy Neuman, D-Alpena; and U.S. Rep. Bart Stupak, D-Menominee, fell in line to trumpet job creation without looking at the larger economic picture of who really would pay and how much.

With elected leadership like that, is it any wonder Michigan is at the bottom?

Make no mistake: No one was looking out for the little guys with their talk about jobs for Rogers City in Presque Isle County. Could they possibly have believed that boosting the electric bills of 200,000 co-op households or businesses by an average of $76 per month for the next 40 years was worth 80 jobs in a sleepy little town on Lake Huron? That is like adding $36,000 to your mortgage.

Serious debate is lacking in these decisions. Solid information like that contained in the T.R. Rose analysis is lost in the talking-heads shrill-fest. No Cherryland director dared ask Wolverine, at least publicly, to prove the T.R. Rose report wrong.

Even if some brave board member objected, it probably would not matter, since Wolverine maneuvered Cherryland, PIE&G, Great Lakes and HomeWorks into exclusive, 40-year power-supply contracts.

But we co-op members still can learn and act. Co-op boards still face elections. We can raise the accountability bar, starting with the next ballot. Today, we can ask, "If they knew all along how expensive it would be, why did they keep spending our money?"

About the author: Tom Karas, of Interlochen, is with the Michigan Energy Alternatives Project.

About the forum: The forum is a periodic column of opinion written by Record-Eagle readers in their areas of interest or expertise. Submissions of 500 words or less may be made by e-mailing letters@record-eagle.com. Please include biographical information and a photo.

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