NEWS

BWL's costly challenge: Replace Eckert Power Plant

Eric Lacy and Steven R. Reed
BWL’s Eckert Power Plant sits on the Grand River near downtown Lansing. The utility is discussing options for new power sources so coal-burning Eckert can be phased out.

LANSING – The Board of Water & Light cannot shutter its Eckert Power Plant without replacing the aging facility's electric generating capacity and upgrading BWL's transmission infrastructure, Interim General Manager Dick Peffley said Tuesday.

Built in the 1950s, Eckert is deteriorating and under environmental pressure to close. As a result, BWL faces an "unprecedented level of work for the next seven to 10 years" to secure its ability to provide power to its almost 97,000 customers, Peffley told BWL's Board of Commissioners.

"We need to get moving on this," he said.

Commissioner Dennis Louney asked if BWL should say now that it needs to build a new plant.

"You can do it by building a new plant," Peffley said. "You can buy it off the grid. … The portfolio probably will include a little bit of everything."

Dick Peffley

Peffley said he did not know how much it would cost to replace Eckert's generating capacity, which is almost triple the output of BWL's REO Town plant, which went online July 1, 2013, at a cost of $182 million.

He told commissioners a new plant cannot be built where Eckert stands — in a flood plain alongside the Grand River south of downtown Lansing and I-496. He told the State Journal BWL also will not try to convert Eckert from coal to natural gas, as Michigan State University is doing at its T.B. Simon Power Plant.

Peffley said the utility's chief strategist will put together a plan that identifies BWL's best options by the end of the year. The planning and design process for BWL's gas-fired REO Town electric-steam generation facility took about three years. Construction lasted a little more than two years.

BWL again will seek community input, said Peffley, who has been assessing BWL's needs since commissioners fired J. Peter Lark on Jan. 13 and appointed Peffley to replace him.

Lansing Mayor Virg Bernero said he was "not aware of any plans developed by Mr. Lark to address the future of the Eckert plant or the BWL's long-term generation and transmission needs."

"It appears that he dropped the ball," Bernero said.

Lark did not respond to telephone and text messages seeking comment.

After the meeting, Louney said he's been surprised to learn over the past year that several maintenance issues at Eckert were not addressed.

"I think we know the infrastructure is growing old, but there was this belief with the new plant (REO Town) that we were really addressing the issues," he said. "And I think what we're finding out is that there were more issues with Eckert than we understood."

Board Chair David Price asked Peffley if electricity would be available for purchase from the grid if BWL suffered a generation breakdown.

"If you can get it, you don't want to know what you'll have to pay for it. It's going to be very expensive," Peffley said.

But BWL is doubling, from two to four, the number of its connection points to the grid, Peffley said.

The connections are part of a specific transmission-improvement plan Peffley said would cost about $101 million to implement over the next six years.

Commissioner Sandra Zerkle asked if BWL would issue bonds to meet its funding needs.

"Otherwise this be historical amount of rate increase for us to meet your guidelines in the next three to five years," she said.

The utility has about $63 million in a construction account to fund the improvements through 2018 "without affecting our rate strategy," Peffley said.

He did not speculate on financing options pending completion of the research process.

The majority of BWL's electric assets have been in operation for 45 to 60 years, Peffley said. But major portions of BWL's service territory — downtown in particular — are still supported by the Eckert facility.