Consumers Energy shelves Thetford in favor of buying power plant

Following through on earlier indications, Consumers Energy parent CMS Energy (NYSE: CMS) announced in its Jan. 30 earnings statement that it is shelving its gas-fired, 700-MW Thetford project in Michigan and buying a gas-fired plant instead.

The company said that Consumers Energy plans to purchase, for $155m, a 540-MW natural gas power plant in its hometown of Jackson, Mich., and will place on hold plans for a new $700m gas plant in Thetford Township in Michigan’s Genesee County. The Jackson plant is scheduled to become part of Consumers Energy’s generating system in the first quarter of 2016, and will partially replace electric capacity from seven older coal-fired units planned for retirement in April 2016. Purchase of the Jackson plant is subject to customary closing conditions, including regulatory approvals, the company noted.

The company didn’t in the earnings statement further identify the plant to be purchased or its current owner.

“The gas plant is a great example of our plan to make strategic investments in Michigan and provide customers with safe, affordable, reliable and increasingly clean energy,” said John Russell, CMS Energy’s president and chief executive officer. “More than a half-billion in savings by buying versus building provides significant headroom to expand our gas utility, the 4th-largest in the U.S., as well as continue investments in improvements in electric reliability. We’re updating our power generation portfolio to emphasize sustainability, environmental benefits and long-term value for customers.”

In other news, Russell noted that construction has started on the Cross Winds Energy Park, the company’s second wind facility, scheduled to begin serving customers in the fourth quarter.

Consumers had put a hold on the PSC review of Thetford while it pursued a plant buy

Because Consumers Energy was considering proposals to buy existing gas-fired power plants in place of Thetford, the Michigan Public Service Commission recently agreed to a delay in the Thetford review proceeding. Consumers Energy in a Jan. 2 motion had asked for the delay, noting that in September 2013, after it filed in July 2013 with the PSC for the approval of the 700-MW Thetford project, it issued a request for proposals (RFP) for the acquisition of existing gas-fired capacity. This capacity would be located within Midcontinent ISO Zone 7.

“The Company has diligently pursued the analysis of the proposals received pursuant to the RFP,” said the Jan. 2 motion. “Because none of the alternatives is identical to the proposed Thetford Plant, that analysis has been complex and time-consuming. Based upon its analysis, the Company has concluded that it is prudent to pursue discussions of the acquisition of an existing gas-fired generation facility. It began such discussions to determine if a suitable contract could be negotiated upon terms and conditions acceptable to the Company.”

Consumers Energy didn’t in the Jan. 2 filing identify any of the parties that it is negotiating with for this existing capacity. On Jan. 30, it filed a notice with the PSC that it is withdrawing its application for the Thetford approval, again without saying where the alternative capacity would come from.

As Consumers said, planned coal retirements key the need for the new gas capacity. The seven coal units to be retired by April 2016, due largely to the federal Mercury and Air Toxics Standards, 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).

There is a plant in Jackson that generally meets the CMS description

As for the unidentified, 540-MW, gas-fired plant in Jackson that Consumers wants to buy, the closest one meeting that description in the GenerationHub database was subject to a December 2013 application at the Federal Energy Regulatory Commission. AlphaGen Power LLC applied Dec. 16 with FERC for an order accepting its proposed market-based rate tariff for a power plant that it owns, but will now sell power directly from.

AlphaGen is an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. (JPMC). AlphaGen owns a 545-MW, natural gas-fired combined-cycle facility located in Jackson, within the the MISO region. AlphaGen currently leases the Jackson Plant to an affiliate of JPMC, Triton Power Michigan LLC, which is also an indirect, wholly-owned subsidiary of JPMC. Upon the completion of an internal corporate reorganization, AlphaGen will terminate the lease of the Jackson Plant to Triton Power and a related tolling arrangement and commence sales of capacity, energy, and ancillary services from the Jackson Plant.

The Jackson Plant has six General Electric LM6000 combustion turbines, one General Electric MS7001EA combustion turbine, seven heat recovery steam generators, and two steam turbines, manufactured by General Electric. The LM6000s are nominally rated at 60.5 MW each. The MS7001EA is nominally rated at 79.2 MW and the steam turbines are nominally rated at 105.5 MW each.

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.