Wolverine Power fights for the right to burn coal

The Wolverine Power Cooperative is suing the state of Michigan for denying an air permit for a coal-fired power plant the company planned to build in Rogers City.

In a suit filed in Missaukee County court last week the power company charges that state regulators lacked legal grounds for denying the company’s air permit. Wolverine is also asking the court to overturn Governor Granholm’s Feb. 2009 executive order that directed state officials to deny permits to coal plants if there are other feasible and prudent ways of meeting the state’s power needs.

Wolverine, based in the Cadillac area, is a non-profit generation and transmission cooperative that serves the Cherryland Electric Cooperative, Great Lakes Energy Cooperative, HomeWorks Tri-County Electric Cooperative, and Presque Isle Electric & Gas Cooperative, which purchase and resell power to 215,000 customers in northern and western Lower Michigan.

In Sept. 2007 Wolverine sought a permit to build a solid fuel-burning power plant in a limestone quarry in Rogers City along Lake Huron. The project, called the Wolverine Clean Energy Venture involved building two fluidized bed boilers capable of generating 300 megawatts each. According to Wolverine, the company does not own any baseload-generating capacity and needs power from the coal plant to meet future demand.

The company claims that in preparing its permit application it took the required steps to minimize air pollution and to comply with national air pollution standards, and in Sept. 2008 the DNRE announced a conditional approval of the permit.

Before the permit was finalized, however, the climate for new coal power development was severely altered by an executive order from the governor.

Granholm warned that coal-fired power plants emit thousands of tons of pollutants that threaten Michigan’s people and environment, and noted that projected power demand in the state had declined.

On Feb 3, 2009 Granholm issued an executive order directing the DNRE to deny permits for coal plants if feasible and prudent alternatives exist for meeting the state’s power needs. She also directed the MPSC to assist the DNRE in evaluating these issues.

The new requirements triggered a new scrutiny of the Wolverine plant proposal. In April 2009 the DNRE asked Wolverine to submit an analysis of less polluting alternatives to building a new coal plant.

After reviewing Wolverine’s analysis, in Sept. 2009 the Michigan Public Service Commission announced that the company had failed to demonstrate that the plant was necessary. According to MPSC Wolverine had failed to adequately consider energy efficiency, load management, renewable resources, or a combination of other alternatives to offset the amount of purchased power needed. The MPSC also said that Wolverine’s forecasted growth in demand was overly optimistic.

On May 21, the MDNRE rejected the company’s air permit application, agreeing with the MPSC’s finding that Wolverine had not demonstrated a need for the facility.

The DNRE also stated that the MPSC had estimated that building the coal plant would increase the rates of its customers by approximately 60 percent. “While this is not a factor in the consideration of the permit decision,” DNRE wrote, “it is a factor that should be considered in good public policy.”

In its lawsuit against the state Wolverine argues that Michigan law does not allow the DNRE to deny a permit based solely on need or cost effectiveness.

The company also argues that the permit denial was the result of an illegal and unauthorized delegation of decision making authority to the MPSC.

As support for this argument, Wolverine points to a Feb. 2009 opinion from Attorney General Mike Cox that stated that Granholm’s order violated the separation of powers doctrine and is unlawful and unenforceable.

Several environmental groups reject Wolverine’s legal arguments.

Anne Woiwode, Director of Michigan chapter of the Sierra Club, said that Granholm’s executive order was a sensible and forward-thinking move aimed at protecting both the environment and ratepayers who would be saddled with the costs of unneeded coal plants.

“As a testament to the accuracy of her decision,” Woiwode said, “CMS Energy, which did get a permit, decided to put their plant on hold.”

In May CMS Energy announced that it was tabling plans for development of an 830 megawatt coal plant at its Karn/Weadock facility outside Bay City. The company cited reduced customer demand and reduced natural gas costs as reasons for the move.

“We think their argument is wrong as a matter of law and as a matter of common sense,“ said Shannon Fisk, attorney with the Natural Resources Defense Council.

Fisk said that Granholm’s executive order is allowed under the federal Clean Air Act and is consistent with state law.

“The Michigan constitution clearly does not prohibit the governors executive order,“ he said. “In fact the state constitution makes it clear that the governor and state agencies are supposed to take environmental factors into account. This is fully consistent with that constitutional requirement to protect Michigan’s natural resources.”

“I would think that ratepayers for Wolverine would be upset that the company is continuing to spend money on something that is not needed,” Fisk said.