By Charles Buck on Sunday, July 8, 2001 - 12:07 am:
Jeff and Constance,
On the issue of UP electric utilities and wind power, I have found two important studies which indirectly touch the issue. I apologize in advance for this long post. The first report was released last month on the question of deregulating UP electric utilities by the staff of the Michigan Public Service Commission (MPSC). (http://cis.state.mi.us/mpsc/lic-enf/reports/upreport.pdf} The MPSC set a timetable for downstate electric utilities to deregulate and begin competing for retail customers just like long distance telephone service providers compete for customers. The question of deregulating the UP market was left up in the air. The UP has relatively limited transmission infrastructure linking it to the lower peninsula, so it is treated as a separate electricity market. As a result, there are concerns one company, Wisconsin Electric Company (WEC), which controls 65 percent of the electricity generating and transmission capacity in the UP, might use its dominance to manipulate electricity prices and gouge UP consumers. The report studies the structure of the UP electric industry and offers conflicting evidence for WEC's potential to exercise market power and drive up consumer prices if the UP electricity market is deregulated. WEC has a political action committee which has been slathering campaign contributions on Michigan legislators, including many UP legislator. The state legislature mandated a particular formula be used to calculate the proportion of electricity generating capacity associated with each utility to determine its level of market power. According to this formula WEC does not exceed the market power threshold which would trigger action to mitigate the problem. International Paper, Mead Paper Company, and a consortium of UP non-generating utilities take issue with how the MPSC staff applied the formula and contend WEC does hold potential market power in the UP. The MPSC staff also present the results of using more widely accepted market power tests used by the Justice Department Antitrust Division, the Federal Trade Commission, and the Federal Energy Regulatory Commission. Those tests show WEC does hold potential market power over electricity in the UP. Despite the legislatively mandated test, the MPSC staff recommended to MPSC that WEC prepare plans on how to mitigate away its potential market power. Unfortunately, the only way WEC can effectively reduce its market power is by divesting itself of the Presque Isle Powerplant (PIP) in Marquette. The coal-fired PIP is far and away the largest generating facility in the UP. It alone represents 50 percent of the UP electricity generating capacity. Most of PIP's power is consumed by the Empire and Tilden Mines. The twist is in the event the mines go under, as is already feared they may due to international steel dumping in the United States, all the generating capacity at PIP which would otherwise be consumed by the mines will have no where to go because of the inability to export power from the UP to the lower peninsula due to limited transmission infrastructure and because the state of Wisconsin has rejected the idea of deregulating their retail electricity market. Whoever purchases PIP in the event of its divestiture from WEC will instantly be able to wield market power over retail electricity in a deregulated UP market. The dilemma does not go away; it just shifts around. Partly as a response to this, UP transmission infrastructure improvements are focused on upgrading the interties with Wisconsin and the lower peninsula to enhance the number of potential competitors for WEC and dilute its market power. The focus is not on improving or expanding the infrastructure of the Keweenaw. This is important because Upper Peninsula Power Company (UPPCO) has or by the end of the year will transfer ownership of its transmission assets (high voltage power lines and distribution network) to the American Transmission Company (ATC). ATC was created recently to consolidate the ownership of the region's power lines in order to strengthen system interties between individual power companies' transmission networks to support a future deregulated retail market. In a non-deregulated environment there is not much incentive on the part of power companies to beef up interconnections with other companies' networks because retail customers are captive and cannot buy power from another company. If you deregulate the market before the infrastructure can support it, you create a potential disaster trying to wheel electricity from network to network overloading substations. So several Wisconsin power companies formed ATC and transferred their transmission assets to it in return for stock in ATC. UPPCO's Wisconsin parent corporation joined ATC, so UPPCO and its sister subsidiary, Wisconsin Public Service Corporation, transferred their wires to ATC. Part of the assets which ATC is receiving from UPPCO is the 69 kV transmission line which runs up the spine of the Keweenaw and ends at the old radar station on Mt. Greeley. Now to the point of all this. Any large wind turbine will have to be sited close to this 69 kV power line which can handle the capacity. Do not expect ATC to drop what they are doing elswhere to extend the line over hill and thro' dale to the best or windiest sites. Their recently released ten year planning report (http://www.atcllc.com/newsroom/10Yr_Plan.pdf} shows their focus on interconnecting the UP. New line runs get very expensive and a wind project can become economically infeasible. This goes somewhat toward the idea of building offshore turbines. Trace the 69 kV power line and see if it approaches the lakeshore at any points. There is a spur which runs north to the "Osceola Substation," but I do not know where that substation is located. If the county retained any of the land around the old radar station, that may be worth investigating as a potential turbine site. I wonder how windy it is there and along the ridge to the southwest which the power line runs below? UPPCO's sister company, Wisconsin Public Service Corporation (WPS), has experience constructing wind turbines in Wisconsin. UPPCO may be able to draw upon their knowledge. Unfortunately, WPS's decision to build the turbines was not a market-based decision but rather because Wisconsin mandated a certain percentage of the state's generating capacity had to come from renewable resources and every utility had to come up with a portion. Engler, when he deregulated electricity markets, required no similar mandate for Michigan. Places in Michigan where turbines are going up, like Traverse City and Mackinaw City, are more economically robust than the Keweenaw and can afford to pay a premium to underwrite such projects.
By Charles Buck on Saturday, July 7, 2001 - 11:41 pm:
Jeff and Constance,
Regarding wind power for the Keweenaw, I find the bird/wind turbine interaction studies in Minnesota and elsewhere you referred to earlier interesting. We have to do more than show members of the Copper Country chapter of the Michigan Audobon Society wildlife studies from other areas tho'. Those will not influence them one bit. The way to get their support is to get them actively involved in the project. I believe the best model of this approach was conducted in Vermont. ( http://www.northeastwind.com/GMP%20WPN98.PDF ) Members of the local Audobon Society were enlisted to survey the area prior to construction to determine areas where birds congregated, nested, or frequently passed thro' in order to rule out those areas as potential tower sites. They offered advice on the best times of the year to conduct construction and maintenance to minimize disruption of breeding birds and migrating birds. Members conducted post-construction monitoring surveys to assess the effect of turbines on bird activity and mortality. The Vermont project also surveyed the impact of turbines on black bear activity. Audobon clubs should be viewed as professional engineering consultants, not simply birders; they have expertise and special knowledge of the area no one else has. Getting them involved in guiding the project will go further toward minimizing potential political opposition than following the UP Engineers' model of shooting it out at public hearings with environmental groups by throwing studies and surveys around. We can see where UP Engineers' project management style has gotten them and their clients. I am not suggesting this was what you were proposing but the emphasis of my earlier observation that the bird kill issue is a problem for wind power in the Keweenaw did not have so much to do with whether wind turbines in fact kill birds, how many, or what this or that study has to say about the issue. No self-respecting Keweenaw birder is going to be persuaded one iota by a study about birds and turbines in Minnesota, Vermont, Denmark, or anywhere else but one place. They love Keweenaw birds and a study of those birds is the only study which matters. The problem I was referring to in my comment about bird kills had more to do with the political problem of how to get the Audobon club working on the project rather than against it out-of-hand. Enlisting them to conduct bird surveys and develop mitigating strategies for bird/turbine interactions is the way to go. I would go so far as give them veto power over siting options and over the whole project if they so wish in order to get them working on it.
By Lynn Torkelson (Ltorkelson) on Friday, July 6, 2001 - 08:22 am:
The Klamath Basin situation is another example of what can go wrong when folks allow themselves to become dependent upon the federal government for their livelihoods. As in the Klamath Basin, much of the farming in the western states is done on land that would not be agricultural land at all without irrigation projects paid for by taxpayers. As water and tax money become scarcer, the clamor from those who have become dependent upon such programs will only increase. Basic fairness requires that the plug should not be pulled instantaneously on such farmers when the government finds it necessary to discontinue the support they've come to depend upon. As in the case of other welfare programs, some transitional support should be made available while people adjust to reality. Unfortunately, as the federal budget sinks back into the red, it's not easy to see where the money will come from for such assistance: Federal budget deficits loom.
