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Who Pays For Outdated Power Plant That Lacks Customers?
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Who Pays For Outdated Power Plant That Lacks Customers?

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Who Pays For Outdated Power Plant That Lacks Customers?

Who Pays For Outdated Power Plant That Lacks Customers?
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Electricity rates in Michigan's Upper Peninsula could go up next month by as much as 30 percent. Residents might have to start paying to keep a coal plant open that isn't needed anymore.

STEVE INSKEEP, HOST:

Good morning. The cost of electricity could jump dramatically next month in Michigan's Upper Peninsula. That's the far-northern part of the state between Lakes Michigan and Superior. The region faces two problems - inefficient power plants have to keep running, and they have fewer customers to share the costs. Peter Payette of Interlochen Public Radio explains.

PETER PAYETTE, BYLINE: Brimley is a little town at the end of the road on Lake Superior’s south shore. There’s a bar, a casino and a couple motels here. It’s Brimley State Park that draws lots of campers here in the summer and into Ron Holden’s grocery store.

RON HOLDEN: The six weeks of summer pay for the rest of the year's bills.

PAYETTE: On the wall of Holden's IGA are deer heads, a black bear rug and a flag that says, American by choice, Yooper by da grace of God. But being a Yooper might cost a lot more in a few weeks. That's when Holden and others will have to start paying to keep a power plant running that's 150 miles away and doesn't even provide them electricity. His monthly bill will jump $700 and he has no idea where he'll get that money.

HOLDEN: I really can't lay anybody off. I need everybody here and everybody here needs this job. Nobody here has this as a second job or because they have nothing to do. I have a husband and wife that work here together.

PAYETTE: The events leading to this are complicated and a bit strange. The owners of the Presque Isle Power Plant actually want to shut it down because it lost its biggest customer last year. But federal regulators say the plant must remain open to keep the lights on in Michigan's Upper Peninsula. That's because the energy it produces is still needed to keep the transmission grid charged and reliable, even if nobody is buying it. Since a working grid benefits everybody, the entire region is being forced to pay to keep energy flowing.

But Dan Dasho says those increases will be devastating. Dasho runs Cloverland Electric Cooperative, one of a handful of utilities serving the UP.

DAN DASHO: I've certainly talked to our commercial customers who've told me that if they see these increases, they're going to close the doors. They're not going to make any money. This is their profit and those profits will be gone.

PAYETTE: Dasho's been making lots of presentations to his members lately. The situation here is the result of unique circumstances and geography. But he says, other parts of the U.S. will face similar problems soon as utilities try to close old power plants rather than try to meet new clean air standards.

DASHO: And people are starting in the industry - are raising their hand and saying this is going to be a problem. In 2017, it's going to be a problem. Do you know how many people care about a problem in 2017? Not very many.

PAYETTE: Environmental groups want renewable sources, like wind and solar, to be significant parts of the solution. Tom Cmar is an attorney for Earthjustice and says, the clean air standards date back to 1990, and the industry could've spent more time preparing to meet them rather than fighting them.

TOM CMAR: As a result of that, there has been a willful failure on the part of the industry to think about what the world would look like once these outdated expensive coal plants are finally retired.

PAYETTE: That matter has become urgent in Michigan's Upper Peninsula. The Federal Energy Regulatory Commission is reviewing the situation. But barring action by regulators in the next few weeks, UP residents and businesses will start ponying up millions of dollars more each month to pay for an outdated power plant that nobody wants. For NPR News, I'm Peter Payette.

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