Progress marked in small steps for leaders of Wolverine
by Richard Lamb, Advance Editor
The long slow road toward building a new power plant is progressing steadily, according to Wolverine Power?s top official who was in Rogers City this week. CEO Eric Baker compared the journey of what Wolverine is experiencing to that of an ore carrier on the Great Lakes. Plans are made well in advance before a turn must be made. Anything Wolverine does, he said, is done looking at the long journey.
?The next three month period is going to be really telling for our project. I think we will have a good idea of what the future will bring and if we get to the next step. The next hand-wringing exercise is ?is this a good deal, now, and should we do this and put all this money at risk,? Baker told a group of 50 invited community leaders Tuesday morning.
Baker said key to a possible next step, which is a decision by the Wolverine board of directors, is receiving the air quality permit now pending in Lansing at the office of the Michigan Department of Environmental Quality (DEQ). According to DEQ spokespeople, a decision on the permit is expected before the end of this year. Wolverine applied for the permit in September of 2007.
?The DEQ has worked very hard and they are very talented and thorough people. I think they believe in what they are doing and I think they are doing the right thing. There is a point at which more studies are not going to be productive anymore and you need to make a decision,? Baker said. OPPOSITION FROM around the country has come to any new power plant and Baker is certain there will be those opposed to Wolverine, should the DEQ grant its air quality permit. Some groups have vowed to ?do what ever it takes? to stop coal plants, Baker said. Staying on course, in the midst of opposition, is important, he said.
?It takes a lot of courage and a lot of determination and I am really blessed with these people who work incredibly hard and are very, very principled. That allows them to get through all the mire that you have to get through to get these things done,? Baker said. The CEO gave an idea of what is going on behind the scenes at Wolverine as they wait for a decision by the DEQ.
?Wolverine has, through a long litany of events that date back to the 1970s, been in a position to effectively rent all its power source needs. We generate very little of our own power ourselves. We buy it on the open market,? Baker said.
HE EXPLAINED that as that market has changed over the past 30 years, partly because no new power plants have been built, the market has ?become increasing constrained? leading to increased prices. The ability of Wolverine to get a long-term contract for power has decreased. Instead of 10- or 20-year contracts, typical contracts run three or five years, he said.
?One of our core missions for our owners is to supply power for a long-term power supply. Well, how do you do that if you can only get a contract for three years?? he asked. Wolverine decided in 2003 to set aside money in a fund for generation development. ?So far more than $19 million has gone into development of this opportunity in Rogers City. That is money we will not get back if this project doesn?t come to a reality. It is a significant financial risk for Wolverine and its members. Where do we get that money? To be absolutely clear, we get it from our customers. It is the only place we get our money as a cooperative,? Baker explained.
The member-owners have been very supportive, Baker said. Since then a site was found, which occurred in 2005 and an announcement of the project was made in May 2006. WOLVERINE HAS financial challenges ahead in its quest to build a $1 billion power plant Baker said. ?Most electrical cooperatives get their funding from the government. That is not the case with Wolverine. We are a completely, totally privately financed company. We have been fortunate to have a very strong banking partner called National Rural Utilities Cooperative Finance Corporation (CFC),? Baker said. Formed in 1969, Baker said it is a ?co-op bank? with more than 1,500 members, including more than 800 utilities.
?Both Wolverine and CFC would acknowledge that they cannot provide for all our financial needs and that was before the financial meltdown of last fall. Knowing that, we set about a mission three years ago to broaden our lending base,? Baker said, adding that a new position was added to aid in the search. In the past month, Baker said, agreements have been reached with J.P. Morgan-Chase and Prudential Insurance, whic
?The moral to all this is that consistent with Rogers City, Wolverine?s is a very long-term vision. It takes a long time to get where you want to go. These power plants take a long time to build. What we are trying to do is look down the road, see where our weaknesses are and systematically shore up everything that we need,? Baker said. ?ON THE financial front we are very excited because now we have introduced ourselves to a much broader financial market. We still have a great lending partner in CFC but now we can support that with great lending partners from the outside.?
Earlier in the meeting, Ken Bradstreet offered updates on the landfill needed for the power plant, the permit process, the harbor permit application and the hearings on Wolverine?s intent to use a smaller unit to measure particulate matter, as some environmentalist have asked.