Consumers: Coal shutdowns underline need for change in Michigan’s energy strategy

The need for a Michigan-first energy plan to ensure reliability and protect customers is increasingly urgent in light of a new Michigan Agency for Energy report that 25 coal units in the state have or will shut down by 2020 due to age and current EPA regulations, said one of Michigan’s major utilities, Consumers Energy, in a Sept. 17 statement.

Consumers Energy, Michigan’s largest utility, is the principal subsidiary of CMS Energy (NYSE:CMS).

The units include Consumers Energy’s seven oldest coal units which are shutting down by April 15, 2016, which is the deadline under a one-year extension of the federal Mercury and Air Toxics Standards. The seven units to be shut are: Cobb Units 4 and 5, Weadock Units 7 and 8, and Whiting Units 1, 2 and 3.

“With these closures, the data shows that the Lower Peninsula will see an electric capacity shortfall beginning next year,” said David Mengebier, senior vice president for governmental and public affairs and chief compliance officer, in Sept. 17 testimony before the Michigan Senate and Technology Committee. “It’s urgent that the state Legislature create policies that put Michigan – and not the federal government – in charge of our energy future.”

He added: “This shortfall is not the result of poor planning on our part. Earlier this year, Consumers Energy filed a plan with the [Michigan Public Service Commission] showing we have sufficient supply and demand response programs in place to meet our customers’ needs and maintain adequate reserve margins for the next five years.”

However, he noted that Consumers Energy is not planning for the 800 MW of demand that is currently taking electric service from alternative electric suppliers. To put this in perspective, 800 MW is the size of a large power plant which would take about four to five years to site, permit and build.  Under current Michigan law, some or all of these retail open access customers could return to the utility with as little as 60 days’ notice.

“While Michigan’s 2008 energy law has largely been a success, it has a fundamental weakness that raises significant fairness issues for many customers. Since that law was passed, a cost-shifting subsidy paid by traditional utility customers to those served by an alternate electric supplier totals more than $1 billion,” Mengebier said.

Mengebier also noted that Michigan and Consumers Energy are making significant progress in improving cost-competitiveness for business, adding that the state had the most improvement of any Midwestern state over the past year. “Our competitive rates are driving growth in Michigan,” pointing to a recent announcement of a new $325 million particle board facility in Grayling by Chilean-based Arauco, creating an estimated 250 jobs.  

Meanwhile, Consumers Energy announced Sept. 16 that it is voluntarily contracting with the new 100-MW Apple Blossom wind park, which is to be built in Huron County. “When it makes economic sense for our customers, we will expand our renewable energy resources in Michigan,” he said.

He added: “While Consumers Energy believes the best energy policy would be to return to a fully-regulated electric market, rather than continuing with the 10 percent cap, we are supportive of the direction Senate Bill 437 takes to address the current inequities in the law today.”

Mengebier also testified in support of a proposed new Integrated Resource Planning process for future state energy projects, adding that an enhanced IRP process provides sufficient opportunity to advance alternative proposals.

Sept. 10 testimony from the Michigan Energy Agency shows these coal retirements, based on information compiled from the Michigan PSC:

  • DTE Electric, Harbor Beach plant, one unit, 121 MW nameplate, retired in 2013;
  • DTE Electric, Trenton Channel, two units, 240 MW nameplate, to be retired in 2016;
  • Consumers Energy, BC Cobb, two units, 312 MW nameplate, to be retired in 2016;
  • Consumers Energy, JC Weadock, two units, 312 MW nameplace, to be retired in 2016;
  • Consumers Energy, JR Whiting, three units, 345 MW nameplate, to be retired in 2016;
  • Michigan South Central Power Agency, Endicott, one unit, 55 MW nameplace, to be retired in 2016;
  • Holland Board of Public Works, DeYoung, three units, 63 MW nameplate, to be retired around 2017;
  • Lansing Board of Water and Light, Eckert, six units, 335 MW, to be retired around 2018;
  • Wisconsin Electric Power, Presque Isle, five units, 450 MW nameplate, to be retired in 2020.

 

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.