With factors like pending generation retirements in mind, including the seven coal units that Consumers Energy plans to shut in 2016 to meet clean-air needs, the Michigan Public Service Commission has ordered all state electric utilities to assess their 2014-2016 power needs.
By March 28, 2014, all Michigan-regulated electric utilities need to file a self-assessment of their electric requirements in the 2014-2016 timeframe. That includes, but is not limited to, the Michigan regulated electric utility affiliate of Wolverine Power Cooperative.
In a Dec. 19 order, the commission also said that the Midcontinent Independent System Operator, PJM Interconnection, American Transmission Co. LLC, Michigan Electric Transmission Co., and International Transmission Co. are requested to submit comments by April 18, 2014. Other interested persons wishing to file comments in response to the assessments also need to file them by April 18, 2014.
Among other things, each assessment should identify all resources designated to meet reserve requirements including generation units that are owned by the load-serving entity or otherwise committed to serve the load, firm contract capacity supported by commitments of designated unit or system resources, and demand response or load curtailment measures in enough detail to verify that no resource is being credited more than once toward the planning requirements of one or more load-serving entities.
Each assessment should also provide details regarding plans for complying with standards set by ReliabilityFirst or other relevant regional reliability organizations, either as an individual load-serving entity or through participation in a planned reserve-sharing group.
New air quality requirements are forcing the retirement of some existing capacity in the state, the commission noted, which in part prompted the assessment order. The commission didn’t get specific about planned retirements.
This assessment order comes amid recent activity involving power plant shutdowns.
Consumers Energy coal shutdowns:
The Michigan commission on Dec. 6, for example, approved for Consumers Energy a “securitization” financing plan that mostly covers the costs of shutting seven coal-fired units in 2016 due to the federal Mercury and Air Toxics Standards (MATS). The utility sought to securitize: unrecovered book value of BC Cobb units 1-5, Weadock units 7-8, and Whiting units 1-3 of $361.2m; $28.5m in issuance ($8.5m) and debt retirement ($20m) costs; and $64.7m in costs associated with the demolition of the to-be-shut Cobb, Weadock and Whiting units.
Consumers said that Cobb units 1-3 will be inoperable as of Dec. 31, 2013 (operation has been suspended since 2009 for safety reasons), and the remaining units will be inoperable as of April 15, 2016, which is a deadline for MATS compliance under a one-year extension approved by state regulators. The basic MATS deadline is April 2015.
Cobb Units 4 and 5, Weadock Units 7 and 8, and Whiting Units 1-3 are currently operational. If not for the impact of the MATS rule, the company would expect these units to remain in operation until their current retirement date of 2025. The affected coal units are:
- BC Cobb Units 4 (156 MW installed) and 5 (156 MW);
- JC Weadock Units 7 (145 MW) and 8 (145 MW): and
- JR Whiting Units 1 (101 MW), 2 (99 MW) and 3 (124 MW).
Likely Presque Isle plant shutdown:
A Wisconsin Energy (NYSE: WEC) subsidiary and Wolverine Power Cooperative said Dec. 19 that they have decided to end their joint venture at the Presque Isle power plant. Under the joint venture, utility subsidiary Wisconsin Electric Power d/b/a We Energies would have sold a one third share of the Presque Isle plant in Michigan’s Upper Peninsula to Wolverine, which is a generation and transmission cooperative based in Michigan. The deal would have resulted in new emission controls being installed at Presque Isle, an approximately 450-MW coal plant in Marquette.
Recently, Wisconsin Electric Power lost a major power customer in the region and now may have to close the plant instead of retrofitting it with needed air controls. The plant may get a temporary life extension because it is needed for local grid support.
Wolverine in December also said it has officially terminated plans to build a long-stalled, 600-MW coal plant in Michigan’s Lower Peninsula.
DTE Electric shutdowns:
DTE Electric, a DTE Energy (NYSE: DTE) subsidiary, filed at the Michigan commmission on Sept. 30 its latest plans. Robert Palmer, the Manager of Asset Optimization in the Fossil Generation Organization of DTE Electric, addressed issues like planned coal unit retirements.
In a prior case Palmer indicated that Harbor Beach coal capacity would retire at the end of 2015 and that the coal-fired Trenton Channel 7 and 8 would both be retired in 2015.
But, as a participant in the MISO market the company cannot unilaterally retire units. The company must make a request to MISO to study the system reliability impacts of any retirements and obtain their permission to retire units on a certain date. In November 2010 the company made such a request to MISO for Harbor Beach. The request was updated in December 2011 to request a retirement date of Jan. 1, 2012.
In its response, MISO declared Harbor Beach a System Security Resource (SSR) and stated that the earliest date the plant would be allowed to retire would be Dec. 31, 2015. That date was based on the schedule for transmission upgrades being performed in the thumb of Michigan by ITC Transmission.
DTE held further discussions with MISO and ITC during late 2012 and early 2013 in an attempt to find a mutually acceptable retirement date for Harbor Beach that could take effect before the April 2015 MATS rules would otherwise force the economic retirement of the coal-fired Harbor Beach capacity. MISO and ITC performed further transmission system reliability analysis at the request of the company and determined that a partial completion of the thumb transmission upgrade would allow Harbor Beach to retire while still maintaining MISO reliability standards for the transmission grid. That partial transmission system upgrade was planned to be completed near the end of 2013. For purposes of the Sept. 30 case, the Harbor Beach Power plant (103 MW) and the 4 MW of diesel peakers located on the site are assumed to be retired as of Jan. 1, 2014.
The company received a letter dated Sept. 10 from MISO indicating that MISO will not seek an extension of the SSR agreement which expired on Sept. 30. Based on this information, the company moved ahead with the retirement of Harbor Beach in 2013.
Current plans are to retire Trenton Channel Unit 8 while Trenton Channel Unit 7 will have emissions-control technology installed to make the boilers compliant with the MATS rules that are now required to be completed at Trenton Channel by April 2016 (after a one-year MATS compliance extension from Michigan regulators).