BRIEF SUMMARY OF CONDITIONS SURROUNDING THE PLAN TO BUILD A 425 MEGAWAT COAL FUELED GENERATING PLANT ON THE SHORES OF MANISTEE LAKE



Current Production of Electricity in Manistee and Pollutants
There currently is a co-generation plant on Manistee Lake. It is called the TES Filer plant. It was constructed about 14 years ago and is jointly owned by the Tondu Corporation of Houston, Texas, several individuals and CMS energy. The plant was built with incentives because of the commitment to use the wood chips from Packaging Corporation of America, sited next to the generating plant. The PCA makes paper. Since the TES Filer plant's construction, they have added chopped tire fuel to the mix (10%) and now have permission to burn oil coke (15%) as well. The emissions from this plant are supposed to be controlled by BACT standard. The plant has a capacity of 85 megawatts. The amount of lead, sulfuric acid and nitrogen oxide from this plant is what would be expected for a plant that size. You can find the exact amount of the pollutants in the air of Manistee county by going to the web site www.scorecard.org. The amount of mercury emitted by this plant, reported by the plant, is 137 pounds annually. According to scientific studies, approximately 74% of the mercury found within 1.5 miles of the smokestack of a plant comes from that plant. That means in the 14 years this plant has existed, as much as 1438 pounds of mercury could have settled into our streams, lakes and land. Mercury does not disappear, and it becomes a more toxic form, methyl mercury, when it enters the water. One 1/70 of a teaspoon of mercury can pollute a 25-acre lake. This plant was paid for entirely by the owners after 5 years of operation. According to recent court documents, resulting from a suit entered against Filer Township and Manistee County for tax relief, this plant earns the owners approximately $16,000,000 a year. The judge in this case threw out the Tondu suit calling the data provided by the corporation not credible.

Proposed Development of New Generating Plant and Pollutants
The same corporation, Tondu Corporation, of Houston, Texas is now engaged in trying to erect another plant on Manistee Lake. This plant, if approved would generate 425 Megawatts of electricity. The facility would involve three cooling towers of massive proportion, two hundred foot high buildings and a smokestack that would reach 400 feet high in the hopes that pollutants would be broadly dispersed, according to the president of the Tondu Corporation, Joe Tondu. The emissions from this projected plant would add significant pollutants to the mix that already descends on Manistee County and surrounding area. Specifically, according to the documents submitted by the corporation here are some amounts.

Particulate matter     737 tons annually
Nitrogen Oxide     2,693 tons annually
Sulfur Dioxide     4,444 tons annually
Volatile Organic Compounds     60.6 tons annually
Lead     832 pounds annually


Mercury Emissions
The applicant, Manistee Saltworks Development Corporation/ Tondu Corporation indicated that the plant would also release 420 pounds of mercury into the atmosphere each year. If you add that to the mercury already coming from a Tondu plant in Manistee county, the total becomes 557 pounds. It may be, that the plant may only emit 400 pounds. That would mean 537 pounds of mercury into the atmosphere around Manistee each year. Again, applying the 74% rule, that would mean that it is possible that 502 pounds would fall directly on our lakes and streams and land within 1.5 miles of the smokestack. The rest could travel as much as 600 miles from the site. To put this amount of mercury in a context, the mercury emitted from the Detroit Edison plant in Monroe is 746.7 pounds annually and the amount from the River Rouge plant is 100. The amount from the city of Holland's plant, the James DeYoung plant is 8 pounds. We would become the second most mercury polluted area from a coal-fueled power plant in Michigan according to figures released on coal plants by the Grand Rapids Press in November of 2003. (Please note that since this summary was written, the developer of the plant said they will use MACT standards as required and when they are established rather than BACT standards which they were following in their original proposal. They do advise the DEQ, however, that any new MACT requirements must comply with T-BACT requirements of the State of Michigan, which are lower. I have not seen their new statements of expected pollutant releases to the environment under the new standard, but they state some pollutant emissions will be reduced by 30 to 40 percent and are now talking about 80 pounds of mercury release a year. That would mean that in this geographical area, given the release from the developer's existing plant, there would be 217 pounds of mercury annually. Over a 10 year period, the mercury release from the new plant alone would be 800 pounds of mercury.)

Manistee Lake, a Preserve, Will Receive Plant Effluent
In addition to the toxins to the environment, the effluent from coal pile runoff and cooling chamber discharge would be discharged into Manistee lake at a significantly higher temperature than the lake. To put this in context, in the DEQ records it states that Manistee Lake is to be preserved for cold water fish and partial and full body recreation. The latter reserve has not been respected in the past and the lake bottom of Manistee Lake does have significant pollutants present and there is a plume of leached materials under the lake moving toward Lake Michigan from previous industrial use of the shoreline. This should not be the rationale to use the lake for more pollutants, stating it is okay because it is already polluted. Additionally, the proposed plant will store on site, 17,000 gallons of ammonia, 15,000 gallons of 15% sodium hypochlorite, and 670,000 tons of coal in open coal piles.

Health Impacts
There is some data already available about human health impacts from a study done in 2001 by the Manistee County Community Health Task Force. The report shows comparisons of deaths per 100,000 people in Manistee compared to the state average and deaths in Wayne County.

Manistee   Mich. Average Wayne
Cancer 274.7 199.0 209.0
Heart Disease 342.3 271.4 324.0
Respiratory 67.6 41.9 34.7

Another issue regarding the development of this plant is that they would have to redesign the shoreline along which the plant would be built to accommodate the large coal boats that would come to unload. It is expected that there would be 13-18 large coal boats a month. This redesign and development of the docking location would cause massive disturbance of the pollution that already exists on the bottom land of the lake and would disperse it throughout the lake and into Lake Michigan.

Why The Proposed Plant is Being Considered
Given all of the above, one must ask why any city government would even consider such a development. Well, the Tondu Corporation, utilizing emotional ties to this area as the Tondu family is from Manistee County, suggested to the city and to the county that there would be a large tax base that would bring new revenue to their budgets. As a matter of fact it appeared that the revenue from a $550,000,000 tax base could be as high as 15 to 18 million dollars. They also promised to "create" 60 jobs, bring $100,000,000 in income during the construction phase and annually pump $11,000,000 dollars into the local economy because of payroll, services purchased, etc. The city and county officials understandably thought they had won the lottery and all of a sudden all projects that had been put on hold would have a possibility of being realized. As a matter of fact, the planning consultant to the city of Manistee used in his justification to approve the special use permit for the plant, the large tax base that would be realized.

A Quote from The Tondu Corporation on Economic Benefits
Of interest is that in the application for air quality submitted to the DEQ on September 10, 2003, the Tondu Corporation states, "No new localized industrial/institutional/commercial/residential growth will be directly associated with the new facility. Employment at this power plant will be small compared to employment of other establishments in the Manistee area. Therefore, associated residential and industrial growth as a result of the new facility will be very minimal and not result in significant degradation of existing air quality in the Manistee area."

Promise of Old Toxic Site Cleanup
The other hook the Tondu Corporation used is that they said they would clean up the site on which they would locate the plant. They have actually stated in documents to the city that the city should be concerned that if their project is not approved there may be no way to clean up the site. There are many ways to clean up this site. Actually Tondu Corporation plans to apply for a Brownfield development grant to do so and has set that figure at $10,000,000. He could apply for much more. If this was to occur, the city would have to pay part of whatever money he was granted because of recent administrative decisions on this fund made by the governor. So, the Tondu Corporation was also attractive to government officials because a bad site would be cleaned up on the lakeshore. The focus has always been on the cleanup by the Tondu Corporation and not the risks that their plant will bring. Sometimes their promotion as noted above bordered on unnecessary pressure by statements made. With repeated requests to the Tondu Corporation about what cleanup means, they have never given any specifics. It is possible that it could simply be capped so it is useable by the new facility. In the Tondu Corporation Phase I report to the city of Holland, they state their strategy on permitting. It states, "It is believed all of the required permits will be issued as needed, but it is difficult to predict what opposition could form…Tondu's approach to minimize the permitting risk is to develop a large consensus and support for the project, including local and state level governmental support, labor unions, environmental groups, etc."

On the Matter of Taxes and Tondu Corporation's Financing
But then in late November, the other shoe dropped. It became known that the Tondu Corporation, who local officials thought would own the plant as a private investor, had been negotiating for over 18 months with public energy pools in Michigan to be the owners of the plant. Specifically the pools involved were the Michigan Public Power Agency and the Southwest Michigan Power Agency. These agencies pay no taxes. Mr. Tondu, unknown to the city and county who were led to believe there would be a huge tax windfall, had set up a financial plan that these public power agencies would own 80% of the plant and the Manistee Saltworks Development Corporation, another corporation owned by Mr. Tondu, would own the other 20%. That means that the owner of the plant and thus the electricity would be cities such as Traverse City, Charlevoix, Petoskey, Grand Haven, Holland, Harbor Springs, Hillsdale, etc. It is said that Holland will be the largest owner and it has been reported that Hillsdale will own 3% of the plant and thus the electricity. In an article in the Hillsdale News in November of 2003, it describes how the residents of Hillsdale would see a reduction in their electricity bills because of their ownership of this plant. Holland already owns all or partial pieces of two plants and maybe more. It is known that Holland has already been selling excess electricity and bringing millions of dollars into their city and county budgets. These cities, which will pay no taxes, will own the electricity, which they will be able to use to reduce electricity bills or sell on the wholesale market. The Tondu Corporation has used the argument that this plant is needed for "base power" in Michigan. There is evidence to suggest that excess power has been available on the grid. As a matter of fact this is referenced in the report of the recent Tax Tribunal wherein the judgement was against the Tondu Corporation for providing information on appraisals and earnings that was not credible. It is known that the TES Filer plant has shut down for a month at a time to keep electricity off the grid.

Huge Benefits to the Tondu Corporation of Houston, Texas
The other complicating piece of the layered way in which the financing has been laid out for this project is that it is the Manistee Saltworks Development Corporation that owns the options to the land on which the plant would be built and it appears that it is the Manistee Saltworks Corporation that will own the 20% of the plant. It is now known that the way the Tondu Corporation comes into the picture is that they will be granted a 30 year "takeoff" agreement with the public power agencies to be able to get 200 megawatts of electricity annually. This will probably be at a set price. What is interesting about the way in which this has been set up, is that the Manistee Saltworks Development Corporation could sell out their ownership in the plant at any time and theTondu Corporation will still have benefited. If the Manistee Saltworks Development Corporation sold the plant to one of the public agencies, there would be no tax base at all. It is interesting that at the present time, the Manistee Saltworks Development Corporation is negotiating with the City of Manistee, a service fee to be able to locate in the area rather than pay taxes. They have excluded the county from these negotiations and have been quoted as saying that they will negotiate a fee for service for locating here with the county after they have set a fee with the city. What is very interesting is that Mr. Tondu has stated that he cannot make a profit on the plant if he is taxed the way Michigan tax laws are now set up. Why should they not pay taxes like every other business in Manstee County? Wouldn't a local ice cream shop be able to make more profit if that shop did not have to pay the standard tax?

It should be recalled at this point that the Tondu Corporation lost a suit recently in which they tried to get a reimbursement paid to them by Filer Township because Tondu Corporation pleaded that their electricity was not a durable and therefore should not be taxed. It appears that they have this in the back of their mind as they are now trying to set a fee rather than pay taxes.

What is even more interesting, is that all this negotiation could be meaningless if the Manistee Saltworks negotiated a fee and then sold the plant to the public power agencies after one year. The negotiations would be fruitless as the public power agencies do not pay taxes, and Mr. Tondu, the Manistee Saltworks Development Corporation nor the Tondu Corporation can negotiate for the public power agencies.

It would probably not be wise to trust the intent of the Tondu Corporation in regard to their concern for the health, welfare and safety of the residents of this area. The suit against Filer Township is one indication, and the fact that the corporation has been negotiating with public power agencies for over a year and that Mr. Joe Tondu has been receiving fees during that time while leading the officials of the city and county of Manistee to believe that he was working with them in good faith is another.

Costs to the Citizens of Manistee
The burden to the taxpayers of the city and county even looms larger than the poison to their environment and the change in their quality of life. With this plant will come large costs. They include loss of approximately 11 years in the capacity of the landfill because of the increased ash. Expansion of the waste water treatment plant if the DEQ does not permit discharge into Manistee Lake, repair of at least two bridge opening mechanisms which have reached their useful life according to city manager Deisch. Additionally there will be wear and tear on roads to and from the plant, probable discharge of foreign species in ballast water from the ships as they vary their ballast in the harbor, deterioration of the river channel from increased traffic and probable reduction in the number of people who will move and vacation in the area because of the plant. This does not factor in increased burden on health facilities because of increased health risks.

No Environmental or Economic Impact Study Has Been Completed
It should be pointed out that the Tondu Corporation has not offered and neither the city nor the county has requested that an environmental and an economic impact statement be prepared.

Jobs and Other Promises
Let's turn to the jobs and other promises. Originally the Tondu Corporation stated that they would create 60 jobs. They now are talking about bringing 60 jobs to the job pool. It has become evident that in a plant such as this there is a requirement for supervisory personnel who have specialized training in power plant operation. They will not come from the Manistee area. The next level of skill required is Operator 1 and Operator 2 and then maintenance. Operator 1 and 2 require a level of skill that can be trained on the job before the plant opens. There has been no clarification as to how the plant would be staffed. The maintenance personnel could be hired from the area. This plant is not about bringing jobs to the community. That argument has been used as a hook to people's emotions because of the past history of job loss in Manistee County. Think for a moment how many jobs would be created by alternative clean industry that can be attracted to the area, or think about how many jobs are created by every 20 new families and entrepreneurs that move to the area because of it being a recreational destination point? One's suspicions should also be raised about the possible closure of the TES Filer plant. If that happened, there would be a source of trained operators. Why should one be suspicious about this? In the judgment statement prepared by Judge Southern in the TES Filer suit, Mr. Joe Tondu is quoted stating that the TES Filer plant is "an anachronistic plant form the 1980's." Statement like that should raise questions at least about plans for it in the future. Saying the new plant would create 60 jobs for the job pool may be close to a true statement, but it does not go on to say where they came from. What if they came from a closed TES Filer plant?

Let's consider the promised $100,000,000 windfall to the construction tradespeople that Tondu Corporation suggests will come to the three year period of construction. The plant is a power plant. The general contractor will be a specialist in this area and will come from the pool of specialists available globally. Once the contract is given to one of these specialists, that contractor will staff crews with skilled people in power plant construction first and then turn to local skilled trades. The Tondu Corporation has not certified how many local construction jobs there will be and has no control of that once the general contractor is hired. It is also remembered that whatever trades opportunities there are, they will dry up after three years and then what? We need to stabilize this economy for tradespeople by focusing on continued development of the city and county as a place to live, recreate and invest in entrepreneurial enterprise. That will keep contractors consistently busy. For example, think about what 20 new housing starts every year for three years would mean to tradespeople and think of the related services that would come with those 60 families. And this could go on indefinitely, each year geometrically increasing. That is stability of jobs and economic development.

Now turn to the promised $11,000,000 annual contribution to the economy. There is no documentation other than a statement that the payroll will be $4,000,000. In another document it states there will be $2,500,000 in payroll and $900,000 in payroll taxes, but there is no documentation beyond that. At this time it is a groundless estimate. There is a proposed plan that has been submitted to the municipalities in which influx to the local economy is liste as 6.7 million. Again, as with other data provided by Tondu Corporation, the numbers are moving targets.

Final Thought
This is a story about energy pirates building a "merchant energy plant" in the city of Manistee and leaving the taxpayers of Manistee city and county with the burden of the costs to maintain the "merchant plant's" presence. Why should Manistee county residents be indentured for the rest of their lives to the Tondu Corporation and the cities who already are more economically well off than Manistee? Why suffer erosion of our environment and our health in this manner? There are so many other ways to build up this city and county without hurting ourselves and our neighbors to the North, South, East and West. The people of Manistee should grab the initiative to direct their own destiny. Cleaner electricity than what Tondu Corporation is proposing can be developed, and the electricity could be owned by Manistee and others. We don't need to produce electricity for Holland and others and get only their pollution.