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Upcoming power plant vote in spotlight

April 14, 2009
By Jenny Lancour

ESCANABA - The upcoming vote on the city's power plant was in the spotlight when Escanaba City Council discussed the proposed electric budget with administrators Monday.

During the budget work session on the electric fund, council members commented and questioned Electric Superintendent Mike Furmanski, City Manager Jim O'Toole and City Controller Mike Dewar.

"We need to inform people of the options of each vote," said council member Brady Nelson. "There's a lot of confusion out there. This is a critical question."

Escanaba citizens will vote May 5 to grant city officials the authority to sell, lease or dispose of the power plant. An answer to this referendum is needed for the Electric Advisory Committee to further explore power options it has in hand.

The city has been exploring ways to provide reliable and economical power for customers because the plant is inefficient. The city has proposals to purchase power at a cheaper rate than it's costing to generate energy. Three companies have also expressed interest in buying the city's coal-fueled plant to convert it to burn biomass.

If the city is granted the authority to sell the plant, officials will discuss the proposals in more detail with the interested parties to decide if this is a direction the city might pursue to provide reliable and economical power.

In addition, city officials have until June to reach a contract agreement with the Upper Peninsula Power Plant Company (UPPCO), which operates the city's power plant. If no pact is reached, UPPCO will operate the plant for only two more years, according to the current contract.

"We are in negotiations right now to see where we can go," said O'Toole, adding the two parties are "far apart" on some issues. City officials have also begun talks with other companies to operate the plant, he said when questioned by council.

"The plant is old and as efficient as it can be," O'Toole said, adding the city has a distribution system to maintain and also has transmission lines costs to cover, he said.

"We've been asking the serious question - 'Why?'" he said, answering, "We need to have competitive rates for our consumers."

He added, "A 'yes' vote gets us the details to make sure (the power companies) can do what they say...We're all talking about the same thing - reliable, competitive electricity and maintaining jobs."

Nelson added city officials are concerned about the jobs held by the 28 UPPCO employees, but they're more concerned about the increasing electric rates for everybody in the city.

The proposed budget is based on electric rates going up 20 percent across the board. In addition, wastewater rates are proposed to go up 21.5 percent and water rates are to be increased by 10 percent for all customers.

O'Toole said, "I don't want anyone to lose their job...The deal must be in the best interest of the people."

When asked by council member Gilbert Cheves about the city converting the plant to biomass, Furmanski explained the generation costs would be the same and the cost of capital improvements would be $25 million.

"Our cheapest option is to buy power," Furmanski said.

Dewar agreed and said the cheapest route is to purchase energy at a savings from an independent provider. He said it costs the city $88 to produce one megawatt of power while it costs less than $30 a megawatt to buy energy off the grid.

"Citizens have to decide if they want to pay higher rates or save money," Dewar said. "The money comes from citizens no matter where you're getting power from."

City Clerk Bob Richards said about 600 citizens requested absentee ballots for the election just four weeks away.



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