Will it soon be lights out for the Presque Isle Power Plant in Marquette? It's a possibility according to We Energies after their largest customer, Cliffs Natural Resources, decided to purchase power from a new source.
Starting September 1, Cliffs will begin buying electricity from Integrys Energy Services out of Chicago. A switch, their spokesperson says, will save them tens of millions of dollars annually.
Around 170 jobs hang in the balance at the Presque Isle power plant after Cliffs Natural Resources announced it is enrolling in Michigan's electric choice program, allowing the company to purchase deregulated power for the Tilden and Empire Mines. Under Michigan's Utility Choice Law, customers using more then 10 percent of a utility's sales weren't able to switch suppliers. But a change in 2008 exempted mines from the cap.
We Energies says it's unsure why the decision came five years after the change, but losing its largest customer will result in an uncertain fate of the plant and its employees.
"We're mitigating our options for this loss of load for 2014 and beyond," said Gale Kappa, We Energies CEO. "We simply have to look at the future of the Presque Isle Power Plant."
A Cliffs spokesperson says the decision comes after three rate hikes in five years, an increase of 110 percent.
"What we're looking at now, using deregulated power, being able to reduce the cost to the mines in the magnitude of tens of millions of dollars annually. Roughly 17 to 26 percent," said Dale Hemmila, Director of Public Affairs for Cliffs.
Rates for WE Energies are regulated by the Michigan Civil Service Commission. The MCSC says the energy company has filed three rate increase applications since 2008. The rate increases are to recover costs for newer power generating facilities in addition to environmental compliance costs with the Environmental Protection Agency.
Cliffs says the savings will support the viability of both mines and their 1,600 employees.
"That allows us to keep our costs lower and maintain the employment levels that we have and the production," Hemmila added.
We Energies has approximately 21,000 customers in the Upper Peninsula, but 80 percent of the power produced is for the Tilden and Empire mines. Cliffs argues they will still produce power for a grid that supplies 15 states and a Canadian province and should not impact the power plant.
We Energies says prices for its existing customers will remain the same for 2013, but they are uncertain what will happen for 2014 and 2015.