Traverse City utility officials will consider increasing their purchase of wind energy under a contract that could prove cheaper than energy produced by fossil fuels.
Traverse City Light & Power board members will consider a deal to buy renewable energy from an new project in the state’s Thumb area through the Michigan Public Power Agency. They expect the new electricity will cost 4.5 cents per kilowatt hour. The rate is higher than the current cost of electricity on the open market from coal- and natural gas-fired power plants but officials expect that price will rise over time, said Tim Arends, executive director of TCL&P.
“We are paying a little less than 4 cents now but all of the analysis of the market says the cost is going to be more than what’s called for in this wind energy contract because natural gas prices are going to go up,” Arends said. “I don’t think they can go any lower.”
Light & Power Board Member Patrick McGuire said he’s impressed by the price but he needs to see how the purchase would fit into the utility’s overall portfolio.
“The power we buy now from Stoney Corners (Wind Farm) we just turn around and sell because that’s the way it is with intermittent power,” McGuire said. “If we are going to do the same thing with this it doesn’t seem to make any sense unless it helps us meet our regulatory requirements.”
The state requires utilities to obtain 10 percent of their power from renewable energy sources and TCL&P gets 12 percent of its power from renewable sources. The additional renewable energy would both help the utility if the state increases the requirement and give it another source of renewable energy when its contract with Heritage Wind Energy ends in 2030.
Arends will recommend the Light & Power board consider entering into a 20-year contract to purchase power equal to about one-third of what it gets from Heritage. He will present the proposal to board members for discussion when they meet Tuesday at 5:15 p.m. in the Governmental Center. The board likely won’t make a final decision on the deal until January.
Light & Power could buy more but Arends said that would go against board policy to purchase power from multiple sources in small chunks based on past experience with their Heritage contract.
The city-owned utility pays Heritage 12 cents per kilowatt hour based on a contract that began in 2010
Source: Sierra Club of Michigan