Consumers Energy still plans to mothball, as it first announced in December 2011, seven of its smaller coal-fueled units in 2015 at the B.C. Cobb, J.C. Weadock and J.R. Whiting power plants.
CMS Energy (NYSE: CMS), the parent of Consumers Energy, said in its Feb. 21 annual Form 10-K report that its subsidiary will continue to evaluate its options for the mothballed units, which include:
- installing more environmental equipment on the units to reduce emissions further in order to meet new environmental standards and continue to operate the units;
- seeking an extension of compliance deadlines for new environmental standards;
- converting the units to natural gas instead of coal;
- decommissioning the units; and
- a combination of these options, depending on customer needs and market conditions.
CMS defines “mothball” as placing a generating unit into a state of extended reserve shutdown in which the unit is inactive and unavailable for service for a specified period, during which the unit can be brought back into service after receiving appropriate notification and completing any necessary maintenance or other work. Generation owners in Midwest ISO must request approval to mothball a unit, and MISO then evaluates the request for reliability impacts.
The seven units up for mothballing in 2015, their power ratings, and their net generation in 2012, are:
- B.C. Cobb Units 4-5, 312 MW, 1,564 GWh;
- J.C. Weadock Units 7-8, 310 MW, 1,566 GWh; and
- J.R. Whiting Units 1-3, 324 MW, 1,344 GWh.
The larger, newer coal units that will keep operating are:
- J.H. Campbell Units 1-2, 615 MW, 2,747 GWh;
- J.H. Campbell Unit 3, 770 MW (not including nearly 7% of unit ownership by other parties), 4,606 GWh; and
- D.E. Karn Units 1-2, 515 MW, 2,200 GWh.
B.C. Cobb Units 1-3 are retired coal-fueled units that were converted to gas-fueled units in the 1999-2000 period, but then mothballed beginning in April 2009. Consumers Energy has received an extension of the mothball period to April 2013 and plans to request a further extension of the mothball period through September 2015, CMS noted.
Consumers looks at ways to fill capacity shortfall
With the potential closure of these coal-fired units, Consumers could experience a shortfall in generation capacity of up to 1,500 MW in 2015. In order to address future capacity requirements and growing electric demand in Michigan, Consumers is looking at:
- energy efficiency;
- demand management;
- expanded use of renewable energy;
- development of new power plants;
- power or generating asset purchases to complement existing generating sources; and
- continued operation or upgrade of existing units.
In December 2012, Consumers announced plans to build a 700-MW gas-fueled plant at its Thetford complex in Genesee County, Mich., and filed an air permit application with the state for the proposed plant. Construction of the plant is contingent upon obtaining a Certificate of Necessity from the Michigan Public Service Commission (MPSC) and environmental permits. Consumers expects the plant to be operational in 2017.
In 2012, Consumers burned 8 million tons of coal to produce a combined total of 14,027 GWh of electricity, which represented 39% of the energy provided by Consumers to meet customer demand. As of the end of 2012, Consumers had contracts to purchase coal through 2015 and payment obligations under these contracts totaled $214m. All of Consumers’ coal supply contracts have fixed prices. At Dec. 31, 2012, Consumers had 78% of its 2013 expected coal requirements under contract, as well as a 45-day supply of coal on hand.
In 2012, 98% of the energy generated by Consumers came from fossil-fueled power plants, with 80% coming from coal-fueled power plants.
Renewable energy projects are another major component of Consumers’ planned capital investments. Consumers expects to spend $0.3bn on renewable energy investments, under an MPSC-approved renewable energy plan, from 2013 through 2017. The state’s 2008 Energy Law requires that at least 10% of Consumers’ electric sales volume come from renewable energy sources by 2015, and it includes requirements for specific capacity additions. Consumers has historically included renewable resources as part of its portfolio, with about 8% of its present power supply coming from such renewable sources as hydroelectric, landfill gas, biomass, and wind.
New emissions controls are also in the works
Consumers continues to install state-of-the-art emissions control equipment at its power plants and to convert units to burn cleaner fuels. Consumers estimates that it will incur expenditures of $835m from 2013 through 2018 to comply with present and future federal and state regulations that will require extensive reductions in NOx, SO2, particulate matter, and mercury emissions. Consumers’ estimate may increase if additional or more stringent laws or regulations are adopted or implemented regarding greenhouse gases, including CO2.
Consumers is dealing with the impacts of various air rules. For example, In October 2012, Consumers requested a one-year extension for the coal-fired J.H. Campbell facility under both the federal Mercury and Air Toxics Standards (MATS) and the Michigan Mercury Rule in order to have adequate time to construct emissions controls. In November 2012, the Michigan Department of Environmental Quality (MDEQ) granted that request for MATS only, moving the compliance date to April 2016 for J.H. Campbell. The MDEQ has assured Consumers that an extension will also be granted in writing for the Michigan Mercury Rule, but Consumers has not yet received the extension.
In addition, in December 2012, Consumers also submitted one-year MATS and Michigan Mercury Rule extension requests to the MDEQ for the coal-fired B.C. Cobb, J.C. Weadock, and J.R. Whiting facilities to accommodate the potential for construction to alleviate transmission or reliability concerns. Consumers has not yet received a response from the MDEQ to these requests.