Midland Cogeneration Venture Limited Partnership Wins Arbitration, But With Conditions

Strategic Insights -

The Midland Cogeneration Venture Limited Partnership (MCV) has announced that a decision has been issued in its ongoing fixed energy charge arbitration with Consumers Power Company. The arbitration relates to whether Consumers Power was entitled to withhold fixed energy payments to MCV under its power purchase contract based on plant availability that were not permitted under a Michigan Public Service Commission order dated March 31, 1993. The arbitrator concluded that Consumers Power was entitled to reduce its payments, specifically for historical years 1990, 1991, and 1992. However, the arbitrator withheld judgment on escrow funds reflecting payments in 1993 and 1994 due to pending appeals. The decision does not issue a final order but requests proposals from the parties regarding the form of relief.

Key Takeaways:

  • The arbitrator ruled in favor of Consumers Power, allowing the utility to reduce fixed energy payments to MCV for historical years 1990, 1991, and 1992.
  • The decision does not apply to escrow funds reflecting payments in 1993 and 1994, due to pending appeals challenging rates for those years.
  • Consumers Power made an irrevocable offer in December 1993, providing a "floor" or minimum payment for energy deliveries from MCV for 325 megawatts of capacity not covered under the March 1993 order.
  • The MCV partnership includes CMS Midland, Inc., The Dow Chemical Company, Source Midland Limited Partnership, Coastal Midland, Inc., MEI Limited Partnership, Micogen Limited Partnership, and C-E Midland, Inc. as partners.
  • The plant is capable of producing 1,370 megawatts of electricity and up to 1.35 million pounds per hour of process steam for industrial use.

Statistics:

  • 1990-1993: Consumers Power would be allowed to collect from an escrow account, or be reimbursed by MCV for, certain payments made for energy available but not delivered in those years.
  • 325 megawatts: The amount of MCV capacity not covered under the March 1993 order and subject to the minimum payment offer by Consumers Power.
  • 1,370 megawatts: The plant's total electricity production capacity.
  • 1.35 million pounds per hour: The maximum amount of process steam that can be produced by the plant for industrial use.

Sources:

  • PR Newswire, "Midland Cogeneration Venture Limited Partnership Announces Decision in Ongoing Arbitration with Consumers Power Company", January 12, 1995.
  • The Midland Cogeneration Venture Limited Partnership, Press Release, January 12, 1995.