DTE weighs in against 25% renewable mandate

DTE Energy (NYSE:DTE) officials made it clear Oct. 24 that they oppose a Michigan voter question that would require state utilities to commit to 25% renewable energy by 2025.

DTE Energy Chairman, President and CEO Gerard Anderson said in a quarterly earnings news release that the company supports the current 10% standard, which utility subsidiary Detroit Edison is on track to meet. But Anderson opposes the broader mandate.

Proposal 3 (often referred to as 25 x 25), is a ballot initiative designed to amend Michigan’s constitution and require that utilities generate 25% of their electricity from renewable sources by 2025.

In 2008, the Michigan Legislature passed bipartisan, comprehensive energy legislation that included a standard for Michigan to generate 10% of its electricity from renewable sources by 2015, Anderson said.

“DTE Energy fully supports the current renewable standard of 10%, and we are on track to meet it,” Anderson said. “But we are extremely concerned about the negative financial impact that Proposal 3 would have on our customers. Proponents of this ballot initiative are seeking to dictate Michigan’s energy policy by circumventing the state’s legislative process. Our constitution should not be used to establish detailed industrial policy, including energy policy.”

During the earnings call, led by DTE Executive Vice President and CFO David Meador, company officials said the popularity of 25% by 2025 is declining as voters learn more about the specifics.

Foes of 25 by 25 have set up their own website for Clean Affordable Renewable Energy: www.careformich.com.

The website includes a video by a union utility worker official who said the 25% transition is not well planned and will force early retirement of many fossil plants that employ union members.

Detroit Edison’s generation mix for 2011 was 75% coal; 20% nuclear; 2% natural gas and 2% renewables; and 1% other. “Our renewables percentage will increase this year” but the company is unsure how it will affect other fuels, a DTE spokesperson told GenerationHub. The Fermi 2 nuclear plant also had a refueling outage that lasted from March into April, the representative noted.

As for renewable generation, DTE said it is making a $250m investment in the 110-MW Thumb Wind Parks, which it recently dedicated. These parks are actually a collection of three wind projects built on nearly 15,000 acres along the “thumb” area of Michigan.

Good weather helps company results

DTE reported third quarter 2012 earnings of $227m, or $1.31 per diluted share, compared with $183m, or $1.07 per diluted share in 2011.

Company officials said their coal plants in Michigan run predominantly “all out” because there is little coal-to-gas switching ability in the state.

“Above average temperatures during the summer increased demand and revenues at our electric utility, more than offsetting the winter’s warm weather impact on our gas utility,” said Meador. MichCon is the gas utility involved in the purchase, storage, transmission and distribution of natural gas.

In September, DTE announced it had signed a memorandum of understanding to jointly develop the NEXUS Gas Transmission (NGT) system with Enbridge (NYSE: ENB) and Spectra Energy (NYSE: SE). The project will move growing supplies of Ohio Utica shale gas to markets in the U.S. Midwest, including Ohio and Michigan, and Ontario, Canada.

The new pipeline will serve local distribution companies, power generators and industrial users in the Ohio, Michigan and Ontario markets.

On the electric utility side, Detroit Edison’s capital spending is being driven by installation of environmental controls on coal plants and meeting the current renewable mandate. Detroit Edison has spent $105m on environmental projects year-to-date and $151m YTD on renewables and energy efficiency, according to the earnings presentation.

“We are pleased with what we’ve accomplished so far this year,” Anderson said. “Financial results are solid, operational metrics are on target, and I’m very happy to report that recent survey results show improved customer satisfaction.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.