BWL Response to Lansing City Council Questions

These are the BWL responses to questions sent from the City Council Legislative Office Manager to the BWL on October 21, 2024. Follow-up questions will be answered in writing as needed. 

1. Regarding peak/off-peak rates. Please explain how peak and off-peak times are determined. 

• On-peak and off-peak times are determined by analyzing usage patterns over a 12-month period, using the 15-minute energy and demand readings from smart meters. This data allows us to determine when usage is high during the day as compared with when energy prices are highest. BWL’s on-peak hours are 1 – 8 p.m. Monday through Friday and off-peak hours are 8 -1 p.m., Saturday, Sunday and recognized holidays. More information is available on our website at https://www.lbwl.com/customers/pay-bill/understanding-time-use-rates

2. What is BWL’s projection for retail sales in 2030? How will they produce 50% of that with renewable sources? Please provide details of MW of wind, solar, and/or other renewable sources for this. 

• Projecting retail sales in the outer years of a forecast is difficult, considering variables such as load growth and usage. The current retail forecast for the calendar year 2030 is 2.5 million MWh (for comparison, 2023 was 2.0 million MWh). Compliance with Michigan’s legislative target of 50% retail sales from renewable energy is associated with the retirement of Renewable Energy Credits (RECs). From a combination of existing and planned wind and solar projects, BWL estimates that RECs generated in 2030 will be 1,346,917 for a total of 53%.
• BWL currently has 87.2 MW of wind and 114 MW of solar generation. As announced in the August 20th, 2024, public rate hearing, BWL is actively pursuing an additional 226 MW of solar and 149 MW of wind as new renewable energy projects.

3. Why was the recent Clean Energy Bond given that title? What projects will the money be used on?

• The “Lansing Board of Water and Light, City of Lansing Michigan, Utility System Revenue and Revenue Refunding Bonds, Series 2024A”, as titled in the Official Statement of issuance dated January 17, 2024, have been referred to as “Clean Energy Bonds” because they provide the supplemental funding necessary for the BWL to carry out its investment in clean energy which was announced in July 2023.
• The RICE plant, despite not being considered a clean energy source under new state law – 2023 PA 235, the effective date of which was not until February 27, 2024 – is still considered a necessary component of the overall Clean Energy Portfolio because it provides dispatchable supplemental energy during times when intermittent renewable resources within BWL’s energy portfolio are unavailable, and at the same time, even while not running, will help satisfy MISO capacity requirements. The rationale for the RICE plant was previously explained in detail by the August 15, 2024, “BWL Energy Planning” letter to the City Council, a copy of which is attached to this response.
• The funds from bond issuance will be used for system improvements identified in the Official Statement, which are also included in our capital budget and forecast, in a manner that will allow us to maximize available tax credits. By carefully managing the use of proceeds to maximize tax credits, we anticipate being able to save ratepayers over $4M.

4. How much of the rate increase for electricity is going to pay for the RICE plant?

• BWL’s rate increases are not derived from individual budget components and are instead developed based on the requirements of the organization as a whole and take into account many factors. If considering the RICE plant separately, however, because it has its own transmission, capacity, and energy value to help offset its cost, it is reasonable to say that only a small portion of the rate increase is attributable directly to the plant.

5. Will BWL provide details about the alternatives they examined or modeled before deciding to build the RICE plant? What are they?

• Based on stakeholder feedback from our 2020 Integrated Resource Plan, BWL conducted an All- Source Request for Proposal (RFP). This procurement strategy seeks proposals from qualified parties for a wide range of product categories, including all commercially viable technologies.

• The BWL All Source RFP presentation to the Committee of the whole on 7-11-2023 covered the following items: 

  i. Context for energy, capacity, and carbon intensity 

  ii. Summarized bids we received from the All-Source RFP (106 offers) 

  iii. Evaluation criteria and results from the different technology offers

• The All-Source RFP allowed for the evaluation of multiple viable technologies and the selection of a mix of resources that best meets BWL’s need at the lowest reasonable cost and least risk. We received offers from the following technologies and selected the best offers from each type to pursue. 

  i. Renewable energy (Solar, Wind)

  ii. Dispatchable energy storage

  iii. Hybrid (Renewable energy and Dispatchable energy storage)

  iv. Dispatchable thermal generation

  v. Demand response and energy efficiency programs

6. What is BWL’s projection for total sales (retail + wholesale) in 2030? What percentage of the total will be produced using renewable energy? Please provide data for each renewable energy type and source of generation (biomass, hydro electric, hydro kinetic, solar, wind, etc.).

• Projecting total sales in the outer years of a forecast is difficult given continually changing market conditions, changes in the types of electric generation in the market, and projected energy needs considering load growth and other factors. Updating projections for 2030 and beyond will be part of the continuing budget and forecast process.
• As described in question #2, BWL has existing and planned renewable energy resources, composed of wind and solar, that will be producing energy by 2030. The total projection generation of those resources in 2030 is estimated at approximately 1.5 million MWh of generation.

7. What expenditures does BWL anticipate for building new electric generation and storage capacity? Please provide detailed expenditure plans for each new generating source, by year and by MW of capacity, for each year 2025 through 2050.

• The upcoming IRP, a 20-year study covering 2025 to 2045, will answer this question.
• As noted above, we are actively pursuing 375 MW of clean energy projects with anticipated commercial operations between 2025 and 2027.

8. Given the excessive costs and as yet unproven technologies for successful carbon capture and sequestration or storage, does BWL have a plan for meeting the state of Michigan clean energy goals without carbon capture? If not, please provide the BWL analysis of carbon capture technology and explain what technology BWL intends to deploy, the time frame for that deployment, the quantity of expected capture and sequestration or capture and storage, and the cost for deploying the selected technology? Please express the cost as both a total expenditure and on a cost per ton of carbon captured and sequestered or captured and stored.

• Like all other Michigan utilities, BWL is still developing options and researching methods of reaching the State’s 100% clean energy target by 2040.
• The BWL does not currently project 100% clean energy in 2040 because no technology exists at scale that can economically and reliably replace natural gas generation, including carbon capture and sequestration.
• The mix of resources and technologies to meet a 100% clean energy target must also ensure that customers are not unnecessarily burdened by the costs of implementation. As BWL continues to increase its renewable portfolio and progress towards the state’s clean energy goals, the company will also work within the law to ensure that compliance is practically feasible and is not excessively costly to customers despite commercially reasonable efforts to contain costs.

9. What programs for energy waste reduction and water saving will BWL be offering low-income customers to make bills more affordable

• BWL has had energy waste reduction programs for customers, including low-income customers, since 2009. Several examples of programs include a free in-home energy assessment by a qualified professional, rebates, and incentives on EnergyStar appliances, including free replacement of certain appliances for income-qualified customers, plus education and guidance on how to reduce energy use and save on their electric bill. More information on BWL’s energy waste reduction programs can be found at www.lbwl.com/save-money-energy.
• In addition, BWL’s current Residential Water Rate has a discounted rate for the first 2 CCF for low-consumption users, incentivizing them to reduce their water usage and lower their water bills. BWL also continues researching and developing potential new programs to help customers save water and energy.

10. Does BWL have plans for creating and offering more community solar or other community energy projects for its customers? Please describe each such project and its timeline for completion.

• BWL is working on a business model for community solar associated with the planned in-network solar projects scheduled to come online before 2030, including tax credit benefits available for community solar programs that incorporate low-income customers and are located in environmental justice areas.
• The correct business model and pricing plan are essential for the successful implementation of community solar, as community solar depends on the community's interest and commitment and the securing of anchor tenants to support development and installation.

11. Why does LBWL disincentivize installation of residential solar panels by reimbursing each MWh of electricity generated by residential customers at half or less than the charge to that customer for each MWh provided by LBWL.

• The BWL does not disincentivize BWL customers from installing solar. On the contrary, BWL directly incentivizes customers to install solar by providing rebates, paying customers for solar energy sent back to the grid, and providing educational services and guidance to customers interested in installing their own solar.
• BWL directly incentivizes solar by providing a rebate check of up to $2,000 per customer based on the size of their installed array, an incentive no neighboring utilities offer. In addition, while other utilities limit the size of arrays that can be installed on customer property and have caps on the amount of customer-owned solar that can be installed, BWL has no such cap and does not have any limits on the amount of customer-owned solar that can be installed in the service territory
• BWL currently credits 7.5 cents per kWh for any solar energy returned to the grid by customer-owned solar arrays. This is consistent with the practice of many other utilities as part of distributed generation programs, which offer full value back to the customer for energy received.
• A common misconception is that the commodity charge for each kWh on customer bills represents only the cost of energy. This commodity charge also includes costs associated with capacity, transmission, distribution and various other delivery costs that are required to maintain service to each customer. The amount credited for energy generated by customers appropriately represents only the energy component of the commodity charge as BWL is providing all other components as part of energy delivered to customers when their solar panels are not producing and to cover costs of maintaining the grid onto which solar is delivered back to the grid.

12. Can LBWL commit to not following up building the RICE plant with proposing and building a 4th gas plant during the next 10 years? If not, why not?

• Unless the expected load significantly exceeds our planned capacity, it is unlikely BWL will need to construct a fourth gas plant in the next ten years.

13. What are the renewable energy or storage projects that LBWL intends to build in 2028 through 30?

• This information was presented during the 2024 Public Rate Hearing on August 20th, 2024. Please see slide 24 – exact project and COD dates are still to be announced as contracts are finalized.
• www.lbwl.com/sites/default/files/documents/2024%20Board%20of%20Water%20and%20Light %20Proposed%20Rate%20Change%20Letter%20and%20Documentation_3.pdf
• Projects under contract and now entering the construction phase are Ranger Power’s White Tail Solar project, which will bring 115 MW of solar energy online before 2030, and the Lake Lansing Solar project, which will bring 6 MW to the network.

14. Will LBWL make public its draft renewable energy plan (required by Michigan law to be filed with the Michigan Public Service Commission in February 2025) at least 30 days before the final plan is filed with the Michigan PSC?

• BWL will present its draft renewable energy plan to the BWL Board of Commissioners during the Committee of the Whole public meeting in January 2025 for review and approval, as legislation requires governing body review and approval prior to submission to the Michigan Public Service Commission.
• The draft plan will be included in the Committee of the Whole Board packet for the January meeting and published on the BWL website with the agenda as required.

15. Has LBWL considered building solar power carports on municipal areas as MSU has done? If so, are plans being developed to do so? If not, why not? Has LBWL engaged in mapping of its service territory to identify the best opportunities in the service territory for installing solar energy by using GIS software available for FREE from the National Laboratories.

• Yes, BWL has explored building solar carports by partnering with the Allen Neighborhood Center (ANC) and Capital Area Housing Partnership (CAHP) as part of our energy demonstration projects. The ANC project installed a 30kW solar carport that covers 16 parking spaces. The Walter French project with CAHP is currently under construction and includes a 90kW solar carport that covers 28 parking spaces. We have found that developing carport solar installation is considerably more expensive than ground-mounted systems.
• The BWL uses GIS software to map all solar energy installations in its service territory. BWL also uses several free tools offered through National Renewable Energy Laboratories that provide information on solar irradiance, monthly generating potential, and related areas. BWL is planning for several in-network solar projects in its service territory that were identified as opportunities through the All-Source Request for Proposal process and works directly with residential customers, business owners, and landowners who may be interested in installing solar on their property or have land available for sale or lease for solar use.

16. Is LBWL developing water shut-off prevention programming, similar to its programming for electricity? Please provide the details of such efforts, including the planned time frame for implementation, the plans for communicating about program availability to LBWL customers, the source(s) and amount(s) of funding planned.

• BWL is aware of proposed legislation related to water shut-off prevention programming. If the legislation passes, BWL will comply with it. The legislation is focused on water affordability, which BWL prioritizes. In 2022, we introduced a discounted rate for customers using 2 CCF or less of water, and nearly 30% of our customers fall in that range.

17. What reduction in LBWL’s charge to the City of Lansing for each streetlight has or will result from replacing the incandescent fixtures and lamps with LEDs? Please provide details to explain how the streetlighting rates are set at present, and the future plans for changes in those rates.

• There will likely not be a reduction in streetlighting rates. The energy component is only a small portion of the monthly charge. The BWL recently invested $15 million over 3.5 years to replace 30,000 High-Pressure Sodium lights and associated fixtures with LED units. Additionally, the cost of materials and labor has continued to rise.
• Our street lighting rates may be found here: www.lbwl.com/sites/default/files/documents/2024%20Business%20Electric.pdf
• Street light rates are included in the next cost of service study, which will be completed by calendar year 2026.

18. When does LBWL intend to make public its draft for its 2025/26 IRP? Please describe in detail the plans for obtaining and considering public input regarding that plan.

• BWL is in the process of formalizing its schedule and scope for the development of the next Integrated Resource Plan.
• The Integrated Resource Plan process includes public input. Obtaining public input is useful in understanding customer and public viewpoints and informing decisions related to scenarios and sensitivity modeling for the plan. The draft plan is made available for public comment before it is finalized and approved.

19. Is LBWL supporting microgrid developments in its service territory and how. Please explain the circumstances for BWL customers seeking to develop their own microgrids and/or for BWL to establish microgrid operations in its service territory. How will LBWL address procedures for modeling and implementing microgrids?

• The BWL has explored the microgrid concept by partnering with the Allen Neighborhood Center (ANC) and Capital Area Housing Partnership (CAHP) as part of our energy demonstration projects. The ANC site showcases various technologies for the public to experience and interact with, such as solar panels, inverters, storage batteries, solar-powered picnic tables, and electric vehicle charging stations, plus live data for each device. The Walter French project with CAHP is currently under construction and includes the same combination of technologies. https://www.lbwl.com/about-bwl/clean-energy/allen-neighborhood-center-energy-demonstration-project 
• We are using these demonstration projects to help customers and BWL understand the best way to use the technologies and their effects on the grid.
• Each project would be modeled based on size, location to grid asset, and operational tolerances. Procedures would be developed for any formal process in our Rules and Regulations.

20. What is the total percentage of electrical generation designated as clean energy? Does LBWL categorize natural gas as a form or clean energy in any of its metrics and recordings? If so, where is it categorized that way and why?

• BWL does not currently categorize natural gas as clean energy.
• BWL’s current clean energy portfolio includes Beebe Wind, Pegasus Wind, Delta Solar, REO Solar, Cedar Solar, Assembly Solar, and Calhoun Solar, which are all categorized as clean energy per the definition in 2023 PA 235. This represents 21% of retail sales.

21. How does the LBWL Administration and Commissioners educate themselves and stay updated on clean energy generation including changes in battery storage, failing costs for renewable production. Please outline these efforts including the last session(s) date.

• BWL’s Electric Production Division staff are dedicated to staying abreast of emerging technologies with support from our Strategic Planning, Energy Planning, and Decarbonization teams. These teams specifically focus on clean and renewable energy, energy waste reduction, and planning for our community's energy needs. BWL keeps abreast of current energy trends, research, and technology, consistent with our mission’s focus on safety, reliability, and affordability.
• Staff and the Board of Commissioners regularly attend conferences and webinars presented by the American Public Power Association (APPA), Michigan Municipal Electric Association (MMEA), and Michigan Public Power Agency (MPPA). Several staff sit on committees and boards for these organizations.