In anticipation of constructing a peaking power plant on Harbor Island and meeting the requirements of the City of Grand Haven, the Grand Haven Board of Light and Power (BLP) purchased snowmelt boilers for the project. When the plans were cancelled, the two parties later developed a re-payment plan that involved passing an operating expense to cover a portion of the snowmelt boiler cost onto BLP customers. Although the repayment plan was approved by the city attorney, there were concerns over its legality.
On November 16, 2023, the BLP addressed an attorney-drafted letter from the City of Ferrysburg challenging the surcharges. The letter argued that the snowmelt system benefited the residents of the City of Grand Haven, but was not a necessary expense for power generation. The BLP agreed with the challenge and voted to pass a resolution to stop collecting snowmelt related surcharges from all customers and to eventually reimburse all previously collected snowmelt related surcharges.
When the JB Sims plant was operational, the City of Grand Haven chose to install a system to melt snow on the downtown sidewalks. Since the BLP produced hot water as a byproduct of power generation, it made sense when the BLP and the City of Grand Haven worked out an agreement to operate a snowmelt system. Years later, when the City of Grand Haven agreed to let the Board of Light and Power (BLP) take the JB Sims power plant offline, that agreement was contingent upon two conditions:
The BLP needed to have a method of generating power
The BLP needed to power the downtown snowmelt system
Therefore, the BLP proposed a power plant replacement plan that involved constructing a natural gas plant on the former JB Sims site which would have taken care of both conditions. The city agreed to the plan, but as time progressed, environmental testing for the expected JB Sims clean-up effort revealed that PFAS contamination was present on the Harbor Island site. The discovery of PFAS was the catalyst that local environmental activists needed to get the city council to cancel the natural gas plant project. Potential pollution sparked fear in local residents, and together the activists and residents put pressure on the Grand Haven City Council, effectively cancelling the project in August 2021.
The cancellation of plans to construct a peaking plant left no source of hot water or power generation to run the city snowmelt technology. To resolve this issue, the BLP made a verbal agreement with the city to purchase four boilers for snowmelt at a cost of $1 million which would later be reimbursed by the city. Here are the minutes from the joint meeting that took place in January 2022 which shows the snowmelt boiler discussion.
Because there was no written agreement, the specifics of the loan repayment became complicated, so during the November 21, 2022, Grand Haven City Council meeting, council agreed to form a joint committee with members of the BLP to facilitate a mutual agreement for loan repayment terms.
The committee met on December 13, 2022, and Attorney Ron Bultje who represents both the City of Grand Haven and the BLP provided an email summary included below. (p. 102)
Two days later, during the December 15, 2022, meeting, the BLP discussed the proposed solution, and voted to approve it largely based on the attorney recommendation that the plan was indeed legal. (2:14:40) Kurt Knoth, a member of the joint committee explained, “We all agreed that the BLP would basically forgive 25% of what the city owes us.” This was the way the committee understood the agreement, but General Manager Dave Walters explained, “a forgiving of the loan is not acceptable. We can’t just write off the loan. [] That money has to be returned to the electrical utility reserve funds.” Walters further explained that the BLP needed to determine whether or not the snowmelt charge was a viable electrical utility expense.
Attorney Ron Bultje was very careful with his words. In his email summary he stated, “I understand that the BLP will contribute, as a means of promoting business and preserving a vibrant downtown that uses electricity, $260,000 toward the cost of the snowmelt improvements.”
Attorney Bultje clearly understood that this was a questionable solution. Two years earlier, on September 17, 2020, he drafted a letter (p.105) which was sent to then City Manager Pat McGinnis explaining the city charter and acceptable charges of the electrical utility. The letter stated:
“Section 16.6 of the City Charter provides the BLP with full authority and power to fix rates for electricity. The BLP has no explicit authority to set rates for any other services.”
“Section 16.8 of the City Charter goes on to provide that the funds and revenues received by the BLP for the provision of electrical services will be used only to defray the cost of operating the City’s electrical plant or plants and distribution system for electricity”
“Thus, it is clear that electrical revenues may only be used for the operation of the BLP’s electrical system.”
Despite having this understanding, Attorney Bultje advised the BLP that collecting an operating expense for the purpose of “promoting business and preserving a vibrant downtown,” was an acceptable BLP expense. Board Chair Mike Westbrook was not convinced. During the December 15, 2022, meeting, he questioned Attorney Bultje’s recommendation and voted against the proposed resolution. (2:30:00)
“I think this is a terrible idea. [] We were not elected to fund city pet projects like the snowmelt. [] If we fund this, we forgive it, raise rates on something else? What’s the next step, or project in mind that we’re going to have to fund? A firetruck? City streets? [] The city dump cleanup? [] I’m questioning Ron Bultje here. From my experience with attorneys, you can ask ten and you get ten different opinions, but this feels very much like a shell game with the money. Finding a way to talk it out that this is legal. I’m concerned that there is a litigation risk if we approve this tonight. People who are rate payers in other municipalities are going to come after us and sue. I know Ron’s of the opinion that this is all very legal. I personally question that.”
The agreement was subsequently approved by the Grand Haven City Council.
Once the decision was questioned, during the November 16, 2023, BLP meeting, Attorney Bultje once again very carefully explained that the charges would contribute to a vibrant downtown which would improve the health of the BLP by adding to the bottom line. He advised that the City of Ferrysburg was the only municipality challenging the charges, and he said he had spoken with the other municipalities and they were not interested in pursuing the matter. Coincidentally, in addition to being the attorney for both the BLP and City of Grand Haven, Bultje is the attorney for the Village of Spring Lake, Grand Haven Township, Spring Lake Township, and Robinson Township.
The BLP discussed the challenge to the charges. Chairman Mike Westbrook was still opposed to collecting the fees, proposed a resolution to cease collections, and to refund prior collections once the matter was resolved with city council. New board member Mike Welling, board member Todd Crum who was absent during the December 15, 2022, vote, and board member Kurt Knoth all voted to pass the resolution with several of them stating it was the right thing to do.
This is significant because it shows how an attorney representing multiple parties in a dispute has difficulty providing clear objective advice, and also shows that the majority of members of the BLP are operating in the best interests of their customers.