/ ADVANCE FOR RELEASE AT 11 A.M. THURSDAY, NOV. 7 /
SPURNED IN HOME STATE, MICHIGAN FIRM FINDS CANADIANS
WELCOME ITS LOW-COST ELECTRICITY
/ADVANCE/ANN ARBOR, Mich., Nov. 7 /PRNewswire/ -- Nordic Power, Inc., though rebuffed in its efforts to sell low-cost power to a Michigan utility, has negotiated a contract to produce inexpensive electricity from a $200 million plant to be constructed in Windsor, Ontario, it was announced today.
Nordic, together with an Oregon firm, will use an advanced but well- tested technology to generate 220 megawatts (MW) of power for sale to Windsor's municipal utility.
The Windsor Utilities Commission has signed a contract for the 220 MW, representing about two-thirds of the city's needs. Currently the city's sole supplier is Ontario Hydro, the government-owned provincial utility.
At a news conference in Windsor, Commission Chairman B.A. Battagello said the contract is "a major step in our quest for low-cost, reliable power to drive Windsor's industry and improve our ability to compete."
The initial price of power from the new plant (in today's dollars) is 4.4 cents (Canadian) per kilowatt hour (kwh) (about 3.9 cents U.S.).
Nordic has repeatedly offered to sell power from a plant it is developing in Kalamazoo, Mich., for a comparable price -- 4.1 cents/kwh. But Consumers Power Co. has turned the offer away while contracting to buy electricity from the Midland Cogeneration Venture for 6.2 cents. The Midland plant is half-owned by CMS Energy Corp. (NYSE: CMS), the holding company that wholly owns Consumers Power.
In a June 21, 1989, news release, Consumers dismissed the Kalamazoo proposal as "smoke and mirrors."
John A. Baardson, president of the Ann Arbor-based Nordic firm, said that the Canadian contract should prove "that the promise of low-cost power, using up-to-date technologies, is not illusory. And bear in mind that, over 20 years, the difference between 4.1 cents and 6.2 cents will amount to billions of dollars at these volumes."
Ontario Hydro is actively seeking power from private companies and has announced a program to buy 3,100 MW from private producers by the year 2000. The new Windsor plant will contribute to that program because its power will supplant Hydro power.
"Our proposal in Canada prevailed only after a stiff, competitive process conducted by Ontario Hydro which tested all contenders on the basis of price, reliability and environmental acceptability. That's how you bring inexpensive power to the market," Baardson said.
But in Michigan, he said, the law is different.
"Under current Michigan law, utility holding companies are free to order their utility subsidiaries to buy only from 'independent' producers that are co-owned by the holding company.
"There is no requirement for a competitive proceeding so the utility can -- and does -- pay above-market prices that are passed through to the ratepayer. And the Michigan Public Service Commission, believe it or not, is handcuffed because the Legislature has never given it authority to insist on competition."
In Lansing, Sen. William Faust (D-Westland) is trying to pass remedial legislation supported by the MPSC but so far has been blocked by CMS Energy, Baardson said.
The new Windsor plant, to be located on industrial lands on the city's west side, will be a joint venture between Nordic's Canadian sister company and PowerLink Co., a subsidiary of Portland General Corp. (NYSE: PGN) of Portland, Ore. It will be completed in 40 to 48 months, including time needed to get all necessary permits, and will create 30 permanent jobs.
The plant will produce inexpensive electricity because it will be a cogenerator producing both power and steam. In addition, it will employ "combined cycle" technology, a process which captures the exhaust heat of gas-fired turbines, converts it to steam and uses the steam to spin conventional turbines. The steam is ultimately piped out for commercial sale.
"The secret is to capture every possible BTU of energy and put it to use," said Baardson. "That way, everyone comes out ahead."
Power from the Windsor plant not only starts out inexpensively but promises to stay that way. Its average price over the 20-year sales contract will not exceed Hydro's rate to municipalities and will be, in all likelihood, a good bit lower if Hydro's current rate projections prove to be correct, Baardson said. The steam product will go to a Windsor manufacturing facility.
Nordic's Kalamazoo plant is also intended to be a cogenerator using combined cycle technology. The facility is a retired Consumers Power plant so much of the infrastructure, including four steam turbines, is already in place. Once it finds a customer for its product, gas-fired turbines will be added.
"In the future," Baardson said, "practically all new electrical power will come from unregulated, privately held producers. The situation just cries out for competition. Without government-supervised competition, self-dealing by utility holding companies will cost ratepayers billions. If you have any doubts about the benefits of competition, just look across the border."
Nordic's management team has already constructed and operated three successful cogeneration plants, two in Michigan and one in Pennsylvania. PowerLink specializes in the development of independently produced low- cost power. Its parent, Portland General, has more than 100 years of experience in producing and dispatching electricity.
/CONTACT: John A. Baardson of Nordic Power, Inc., 313-994-3501/
(CMS PGN) CO: Nordic Power, Inc.; PowerLink Co.; Portland General Corp.;
CMS Energy Corporation; Consumers Power Company ST: Michigan, Oregon, Ontario IN: UTI SU: CON SB -- DE022 -- 1820 11/06/91 15:02 EST