The plan is comprised of the utility’s annual budget and long-term capital improvement plan.
Base customer rates are being held constant with those set in July 2016; however, changes in fuel-related expenses and purchase power costs will be passed on directly to customers through the Power Cost Adjustment contained in each customer rate category during the coming year.
“The (fiscal year) 2019 budget is a status-quo budget that is consistent with the board’s action and direction taken at their April 24, 2018, meeting to cease operations of the Sims power plant on June 1, 2020,” said BLP General Manager Dave Walters.
The budget incorporates a power plant operations and maintenance schedule, coal deliveries, and wholesale power purchases consistent with a June 2020 plant closure. Additionally, the budget for next year and the longer-term capital plan includes only minimal “life extension” plant improvements at the Sims plant, or those deemed necessary before 2020. If the Sims plant is required to run longer, officials say additional revenues will be required to pay for these improvements.
The new business plan notes that annual coal costs are increasing in fiscal year 2019, primarily attributed to an increase in lake vessel transportation costs. The projected increase in retail sales volume is estimated at 1 percent above the current fiscal year.
Total retail revenues averaged approximately 13 cents per kilowatt-hour during fiscal years 2015 and 2016. These charges were reduced on average 6.2 percent to 12.2 cents per kilowatt-hour in fiscal year 2018. Over this period, total annual retail revenues have been reduced approximately $2.4 million on about 300 million kilowatt-hours of annual sales.
The projected average for fiscal year 2019 is 12.4 cents per kilowatt-hour, as increases in fuel and purchased power costs are passed on to customers in the PCA.
Overall, the BLP projects $37.5 million in total annual operating revenues, and will use the funds as follows:
— $7.4 million on fuel and fuel-related expenses for local power generation.
— $6.5 million for net purchased power costs (including renewable energy purchases) and transmission expenses.
— $6.9 million for other expenses associated with the operation of its power production plants.
— $2.4 million for distribution system expenses.
— $500,000 in energy-efficiency programs.
— $3.3 million for customer service, accounting, administrative and general expenses.
Additionally, capital improvements for the fiscal year are projected to be $5.8 million and the utility is anticipated to make a $1.8 million transfer or payment in lieu of taxes to the City of Grand Haven’s General Fund.
In addition to the newly approved business plan, BLP Chairman Jack Smant issued a statement earlier this week about the recommendation made by the board to close the power plant by June 2020. In his statement, Smant notes that less costly, more reliable and more sustainable resources are available.
“The Sims power plant is no longer economical as compared to other available resources, the closure of the plant does not impact customer reliability, the plant cannot continue to operate beyond 2020 efficiently and effectively without substantial maintenance and repairs that cannot be cost justified, and available less-costly resources have reduced environmental impacts,” he said.
Smant also noted that the BLP Board of Trustees’ decision, which came via a 3-2 vote in April, is the right decision for the local utility and the community as a whole.
“We are dedicated and committed to fulfilling our established mission, ‘to meet our community's expectations for quality electric utility service that returns value to our customers and the community as a whole,’” he said in the prepared statement. “We will continue to provide electricity for our community as we have for the past 122 years. The closure of a power plant does not change our mission. In addition, the board has not suggested the selling of the utility as an option.”
Read BLP Chairman Jack Smant’s entire statement below: