FERC approves buy of Escanaba coal units in Michigan

The Federal Energy Regulatory Commission on Sept. 24 cleared Escanaba Green Energy LLC to buy two small coal-fired units from the city of Escanaba, Mich., since the buy didn’t raise any market power concerns.

The approval was from the Director, Division of Electric Power Regulation-West at FERC, not the commission itself.

On July 26, Escanaba Green Energy filed an application under section 203(a)(1) of the Federal Power Act (FPA) requesting commission authorization for the purchase by Escanaba Green Energy of two 12.5-MW coal-fired steam turbines and one 18-MW diesel-fired combustion turbine and associated transmission interconnection facilities from the city of Escanaba. The coal-fired units commenced commercial operation in 1958 and the CT unit was added in 2002.

Escanaba Green Energy has no parent or subsidiary companies. It is a private joint venture consisting of HM Investments LLC, Detiege Investment LLC, LaCrosse Family Trust and Michael G. Crall, D.D.S. M.S. 401(k) Plan. HM Investments and Detiege each own 46.5% of Escanaba. HM Investments is a Missouri limited liability company owned by John Ranson, its sole member, and Detiege is a Michigan limited liability company whose sole member is Charles Detiege.

Escanaba stated that the generation facilities are interconnected to the American Transmission Co. system, which is within the Midwest ISO footprint. Escanaba also told FERC that the generation facilities have been determined by MISO to be needed for reliability in the short term and that MISO has tendered a System Support Resource Agreement (SSR Agreement) under the MISO Open Access Transmission, Energy and Operating Reserve Markets Tariff. Escanaba stated that, upon closing of the purchase transaction, the SSR Agreement will be assigned by the city of Escanaba to Escanaba to ensure that the generation facilities remain available to maintain reliability.

Following the acquisition of the generating facilities, Escanaba will own 43 MW, which, according to Escanaba, is de minimis in relation to the amount of capacity in the MISO market, which is over 137,000 MW of generation capacity.

The city of Escanaba’s efforts to sell the power plant has been ongoing for several years. The city’s website shows that 2009 purchase offers came from DTE Energy (NYSE: DTE) and Traxys. The website also shows planning to convert the plant’s coal units to biomass.

“In January 2011, the City of Escanaba issued a Request for Proposal (‘RFP’) for the sale of the Generation Facilities, and through the RFP process, Escanaba was awarded the exclusive right to negotiate a binding asset purchase contract with the City of Escanaba,” said the July 26 application to FERC from Escanaba Green Energy. “Applicant and the City of Escanaba anticipate closing on the Transaction immediately following the issuance of Commission orders in response to this Application and the Market-Based Rate Application.”

The application added: “Following its acquisition of the Generating Facilities, Escanaba intends to convert the boiler of the coal-fired units such that they may be fueled by waste biomass. Such conversion will allow the Generating Facility to qualify to sell renewable energy into the MISO market and to qualify for Michigan-generated renewable energy credits.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.