Photo by Crystal Nelson Hillman Power Co.’s plant at 750 Progress St. is seen in Hillman on Friday. The plant is one of six biomass power plants in the state.

HILLMAN — The Michigan Public Service Commission recently approved a three-year power purchase agreement between Consumers Energy and Hillman Power Co., although the future of the Northeast Michigan power plant remains uncertain.

The agreement approved last week is an extension to an original deal dating to in 1984. When the contract expired in 2015, the Public Service Commission directed Consumers to continue paying the Hillman power plant until a new agreement could be reached.

The newly extended contract will be in place until May 2022. Jenny Wang, spokeswoman for Hillman Power, said via email the contract provides a payment for decommissioning the plant at the end of the deal, but does not require it.

Still, what happens after 2022 remains uncertain.

“At the end of these three years, we hope that the project can be competitive with other power sources and continue to operate as a biomass project,” Wang said. “If the project cannot be competitive, we will seek to redevelop the site, possibly as a solar energy program.

“In the event that we do not continue operating as a biomass project after 2022,” she added, “we want to assure our community that we intend on taking care of our employees who stay on with us through the end of the plant’s operation. Hillman Power Company is dedicated to preserving a meaningful legacy for our local families.”

The plant employes about 20 people, company Manager Chase Shepherd previously told The News.

Hillman Village Manager Dave Post said the power plant provides about 15% of the village’s tax base and the village also stands to lose between $20,000 and $30,000 in water revenue. He said village officials don’t yet know what that might mean for village operations.

“It’s just too bad, because it provides quite a few jobs and there’s a lot of wood haulers that haul wood into the plant,” he said. “It will have an impact.”

Shepherd earlier told The News that, in in addition to its own employees, the plant supports another 24 jobs by spending about $3.5 million for the products needed to produce power amd contributes about $20 million to the local community each year, not counting other financial donations it makes in the area.

Hillman Power is one of six biomass power plants in the state, which rely on the burning of wood and scrap tires to produce power.

Gary Melow is the director of Michigan Biomass, a coalition that advocates for the state’s wood-fired power plants. Melow said the Hillman company has both a role in the renewable energy industry and a role in the disposal of waste products from the forest industry.

Joe Kuznicki, owner of Prell’s Sawmill in Hawks, said his mill produces about 600 tons of sawdust and wood chips. Hillman Power takes in about half of that waste. He said he can only pile up so much sawdust against his buildings before creating a fire hazard.

“The landfills don’t want it, let alone the added cost,” he said. “At least hauling it to Hillman, we can break even getting rid of the waste and turning it into power.”

If the power plant were to close, Kuznicki said, he has no idea what he would do with the sawmill’s waste.

“We employ 20 to 25 people here,” he said. “We generate a lot of wood out of this place. So, if our yard is full of slabs and sawdust, where do you find room to put wood in the saw?”

In the meantime, the deal does come with savings for customers.

“Savings associated with the new agreement will be about 14 percent lower than what was previously paid and will be passed along to consumers,” Consumers spokeswoman Debra Dodd said in an email to The News. “We are committed to ensuring our customers have the energy they need at prices that are fair and affordable to all.”

Crystal Nelson can be reached at 989-358-5687 or cnelson@thealpenanews.com.