DTE Electric is looking at a major gas pipeline project being co-developed by parent DTE Energy (NYSE: DTE) as a primary means to up its supply of natural gas as many of its emissions-challenged coal units have to be retired over the next ten years.
On Sept. 30, DTE Electric filed its annual power supply cost recovery plan with the Michigan Public Service Commission. In it, John Wagner, Director-Fuel Supply, wrote about coal’s embattled role in the utility’s fuel mix: “DTE Electric expects that over the next 10 years it may become uneconomic to continue to operate a substantial portion of our coal fired units and that this coal generating capacity will likely be replaced by natural gas combined cycle units, natural gas peakers and renewables. This dynamic is driven primarily by environmental regulations. Under various scenarios, DTE Electric’s natural gas requirements are estimated to increase from up to 12 BCF per year to up to 140 BCF per year.”
He said that DTE Energy and Spectra Energy Corp. are jointly developing the NEXUS Gas Transmission (NEXUS) project, which is designed to transport growing supplies of Appalachian Basin gas including Utica and Marcellus shale gas production to customers in the U.S. Midwest, including Ohio and Michigan, and to customers in Ontario, Canada including the Dawn Hub.
DTE Electric has entered into a Precedent Agreement with NEXUS Gas Transmission to provide firm natural gas transportation for 8,500 DTH per day starting in Nov 2017 and increasing to 75,000 DTH per day starting on the later of May 2020 or when DTE Electric has added the required electric generating capacity and supporting infrastructure needed to utilize the increased volume requirement. In addition, DTE Electric has the ability to increase the amount of capacity from 75,000 DTH per day up to 150,000 DTH per day starting in May 2022.
DTE Electric will continue to assess the economic and reliability benefits of the NEXUS pipeline against other alternatives, Wagner noted. It plans to pursue Michigan commission approval of the acquisition of NEXUS Gas Transmission capacity as part of its 2016 PSCR Plan to be filed in September 2015, as well as the application for associated incremental DTE Electric generating and supporting infrastructure, as required, in a separate filing.
The NEXUS project will consist of a pipeline that will extend approximately 250 miles from receipt points in eastern Ohio to interconnect with the existing pipeline grid in southeastern Michigan. The pipeline will be capable of transporting 1.5 billion cubic feet per day (Bcf/d) of natural gas to serve local distribution companies, industrial energy consumers and natural gas-fired power generators in the Ohio, Michigan and Ontario regions. The service commencement date for the NEXUS project is currently targeted for November 2017.
Another DTE Electric witness in the PSCR filing noted that DTE Electric has issued a request for proposals to buy a gas-fired power plant and is now looking over the bids. The only coal-fired retirements for the utility over the next couple of years are Trenton Channel Units 7 and 8.