Mich. Public Service Commission: New coal plants not needed

A coal-fired power plant in Port Huron. (Creative Commons photo by nino63004 via Flickr)

Consumers Energy and Wolverine Power Cooperative have failed to demonstrate a need for the coal-fired power plants they propose to build in Bay City and Rogers City, the Michigan Public Service Commission said in a report issued Tuesday.

Unless it retires some of its existing fleet of power plants, which is not an explicit part of its proposal, the commission said Consumers Energy won’t need any additional generating capacity until 2020.

According to the MPSC report, the power plant proposals from both companies did not take adequate account of the declining demand for electricity in the state, the increase in efficiency and renewables programs and anticipated legislation that would levy new taxes on coal.

The commission’s report was initiated by an executive order issued by Gov. Jennifer Granholm in February that invoked a provision of the federal Clean Air Act that allows states to conduct analysis work on whether projects are “feasible and prudent.”

Granholm ordered the MPSC and the Michigan Department Environmental Quality to work together to develop a method of applying such analysis to proposed power plants.

MPSC said that they received thousands of comments on the proposed plants.

“I think it is good news,” James Clift, policy director of the Michigan Environmental Council, said after studying the report. “It says we are not in a critical situation here. In my mind it says ‘let’s implement as much renewables as we can and put people to work building renewable energy in Michigan.’”

“These reports say you have enough time to really explore alternatives without panicking that we are going to run out of electricity.”

The MPSC report said that Consumers Energy had not given enough consideration to meeting power needs with efficiency or renewable energy sources such as wind and that it had not adequately planned for increases in the cost of coal.

The commission noted that Michigan has experienced economic and political changes since the 2007 release of the state’s energy plan which forecast a need for new baseload power.

Renewable energy and efficiency laws passed last year and the declining power demand that has accompanied the state’s industrial decline have reduced the need for new baseload power.

The commission noted that Consumers Energy’s own forecast shows minimal growth in demand.

It stated: “Collectively, Consumers Energy’s expected 22-year growth in peak demand related to weather and A/C saturation levels is less than 100 MW, a relatively insignificant amount.”

The commission also said that building a new coal plant could expose ratepayers to “significant financial risk associated with handling [carbon dioxide] emissions” and noted that the estimated cost of the proposed plant has increased by 32 percent since it was proposed in 2007 and “the plant’s cost may increase further before its scheduled completion date.”

“We are disappointed in the report,“ said Consumers Energy spokesman Dan Bishop. “We will be evaluating our options.”

Bishop said that the report does not mean that a new coal-fired power plant will not be built, and that there would be environmental benefits to building the new coal plant.

“The project we are taking about would be the cleanest in the world in terms of emission reductions,” he said. “A new plant would allow us to retire old plants from the Truman era.”

In the case of Wolverine’s proposed plant in Rogers City in Presque Isle County, the commission wrote that the cooperative has failed to adequately consider other ways of meeting power needs.

“Other alternatives that may fill all or portions of the projected capacity need include; energy efficiency and load management; renewable resources; or a combination of a number of alternatives that could include lesser amounts of purchased power.”

The commission also found the Wolverine had not justified a need for more capacity.

Further given Michigan’s current recessionary condition and uncertainty concerning the time frame for recovery, Wolverine’s forecasted demand growth of approximately 2.0% appears questionable, or optimistic, and the risk associated with this uncertainty was not fully addressed.

Representatives from Wolverine were not available for comment.

DEQ spokesman Bob McCann said the MPSC report will be given careful consideration.

“It is definitely an important part of the permitting process,“ he said. “We are going to need to go through it in very careful detail.”

McCann said that the DEQ expects to have decisions on both of the proposed coal plants by the end of this year.