Union of Concerned cites Michigan reliance on out-of-state coal

In a bid to boost a tough new Michigan renewable energy initiative on the Nov. 6 ballot, the Union of Concerned Scientists on Sept. 13 said that Detroit Edison and Consumers Energy “import” their coal from Wyoming and West Virginia, transferring money from Michigan ratepayers out of state.

The two utilities, the largest in Michigan, sent more than $1bn out of state to import coal in 2010, creating a drain on the state economy, according to a Union of Concerned Scientists (UCS) report. The analysis looked at coal imports in 2010, the most recent year for which data was available. The study found that Detroit Edison spent $615m, with imported coal making up 77% of the utility’s power supply. Consumers Energy spent $441m, with imported coal making up half of its power supply, said the study.

All coal burned in Michigan is imported. The state, which has some low-quality coal reserves, hasn’t produced any of its own coal in years.

“Detroit Edison and Consumers Energy imported every speck of coal they used,” said Jeff Deyette, report author and senior analyst at UCS. “Coal prices have gone up about 81 percent over the last decade and that entire increase was passed onto ratepayers. If the utilities had instead invested in homegrown, renewable resources to produce electricity, like wind, solar and biopower, more of that money could have stayed in the local economy.”

A number of studies by UCS and others have claimed that ramping up renewable energy development and implementing efficiency measures creates local jobs, lowers utility bills, boosts local tax revenues, and generates additional income for farmers and rural landowners. A study released in February by the Michigan Public Service Commission found that the state’s current 10% renewable energy standard, which has a 2015 compliance deadline, is supporting new jobs and economic growth without impacting electricity prices, UCS said. A recent study from Michigan State University on the 25% renewable energy ballot initiative, up for a vote by state residents in November, could deliver up to $10bn in new clean energy investments and thousands of jobs, UCS added. That proposal would mandate 25% renewable generation in the state by 2025.

According to the UCS analysis, most of the coal that Detroit Edison and Consumers Energy imported came from mines in Wyoming and West Virginia. Detroit Edison also imported coal from Kentucky. Detroit Edison’s giant Monroe facility, one of the largest coal-fired plants in the U.S., is the most import-dependent power facility in Michigan, having spent $423m in 2010 to purchase out-of-state coal, UCS said. Consumer Energy’s J.H. Campbell power plant is the state’s second most import-dependent power plant, having spent $199m, it added.

“The question for voters this November is: Do we keep our dollars at home to help our economy or continue to send them out of state?” said Steve Frenkel, director of UCS’s Midwest office. “If voters decide to increase the renewable energy standard, it could keep as much as $2 billion in state by 2025.”

According to the UCS analysis, if the ballot initiative passes, Detroit Edison could avoid as much as $866m in out-of-state coal purchases between 2016 and 2025 and Consumers Energy could avoid more than $1bn.

Sides are lining up over the ballot initiative. The American Wind Energy Association (AWEA) recently endorsed the Michigan Energy Michigan Jobs ballot proposal. “A wind turbine has more than 8,000 parts that can be built in Michigan,” said Rob Gramlich, AWEA’s senior vice president for public policy and a Michigan native. “More than 30 states across the nation have renewable energy standards similar to Michigan’s ballot proposal. They are creating jobs in their local communities as well as clean, homegrown power. If these states can do it, Michigan can, too.”

Utilities in the state, including Consumers Energy, and industrial users have come out against the ballot proposal, saying the power companies are already well on their way to meeting renewables goals and more green power would raise costs.

Consumers Energy is a unit of CMS Energy (NYSE: CMS), while Detroit Edison is part of DTE Energy (NYSE: DTE).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.