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How Much Power Does Consumers Need?

Groups list 37 problems with utility’s claim for a new coal plant

June 15, 2009 | By Glenn Puit
Great Lakes Bulletin News Service

  Falling demand for electricity may make it difficult for Consumers Energy to get permission to build a new coal plant near Bay City.
Last month, Consumers Energy drew fire for proposing a surprisingly high monthly customer surcharge to help pay for its mandated shift toward more renewable energy.

Clean-energy advocates and some businesses complained to the state that the surcharge was far too pricey. The regulators agreed, ordered Consumers to cut the proposed monthly fee by 16.6 percent, and warned that they would keep a close eye on the company’s expense estimates as it builds up its green generating capacity.

Now Consumers is catching more heat, this time for its estimate of how much power it will need to make in the coming years to keep its customers’ lights on.

The company submitted the estimate to the Michigan Public Service Commission on June 5 as a crucial, near-final step in its quest for state permission to build its proposed Bay City coal plant. Dubbed Electric Generation Alternatives Analysis, the estimate is meant to convince the commission that, in order to meet future energy demands, Consumers must build a 930 MW coal plant on the Saginaw River near Lake Huron.

But within hours of its submission, a coalition of statewide and local citizen groups called Clean Energy Now roundly condemned the generation analysis. CEN, which favors developing alternative energy sources instead of new coal plants in Michigan, said the analysis omitted important data that shows Consumers does not need to build the new plant, and that building it would interfere with increasingly successful efforts to create tens of thousands of green-energy manufacturing jobs in the state.

Now the Sierra Club, which is a member of CEN, and three legal groups have sharply stepped up criticism of the analysis. In a letter to the MPSC, the groups called Consumers’ analysis “wholly inadequate” and listed 37 points of missing information that are “…necessary to allow for fully informed review and comment … by both the public and the MPSC.”

The letter, dated June 12 and signed by the Sierra Club, the Natural Resources Defense Council, the Environmental Law and Policy Center, and the Great Lakes Environmental Law Center, demands that MPSC halt its 30-day public comment period on the generation analysis until more complete information about the company’s future energy demand is posted on the agency’s Web site. Currently the public has until July 7 to submit written comments to the MPSC on Consumers’ generation analysis.

Which Numbers?
When the utility submitted its analysis on June 5, Consumers President and CEO John Russell insisted that his utility needed a broad approach to generating electricity that includes new coal power as “an effective risk-management strategy.”

“Even using historically low customer demand growth assumptions, it's clear that we'll need to move forward aggressively on energy efficiency, renewable energy expansion, and a new clean coal plant to serve customers with reliable, competitively priced electricity in the future,” Mr. Russell said.

But Anne Woiwode, executive director of Sierra Club’s Michigan Chapter, said that she and her CEN colleagues believe that Consumers omitted data from its needs analysis that would, if published, significantly weaken the utility’s case that it needs a new coal plant.

“One could easily conclude that Consumers Energy is afraid their detailed documents will not bear up under public scrutiny,” Ms. Woiwode said.

In recent months CEN has used Consumers’ own public documents to point out that energy demand in Michigan is falling, and is likely to do so until at least 2015. CEN points out that Consumers’ required energy efficiency improvements will accelerate that fall, making the plant even more unnecessary, financially risky, and ill-timed.

Cyndi Roper, Michigan director of Clean Water Action, a CEN member, said that Michigan is at an energy crossroads and would shoot itself in the economic foot by allowing Consumers to build a new coal plant. It would flood the Michigan energy market with unneeded power at a time when many reports, including last week’s by the Pew Charitable Trusts, confirm that green-collar jobs are the nation’s fastest-growing employment sector.

“We can either move in the direction of a new, clean-energy economy and jobs or we can build polluting coal plants that undermine our clean-energy job providers,” said Ms. Roper.

MPSC will study the company’s generation analysis, review public comments about it, and forward its findings to the Department of Environmental Quality. Meanwhile, on Friday, the DEQ began accepting written public comments on another part of the Bay City plant’s permitting process—whether there are other ways for Consumers to generate the power it needs other than by building its proposed new plant.

The Cost of Clean
In the meantime, some observers are wondering how MPSC will react if it turns out that Consumers has indeed omitted crucial data from its needs and generation analysis, given how firmly the agency responded when it found Consumers’ proposed clean energy surcharge to be too high.

Consumers first proposed its green energy surcharge to the MPSC in April as part of a state mandate that utilities get 10 percent of their electricity from renewable sources by 2015. After Consumers proposed its surcharge, CEN—which also includes the Michigan Environmental Council, Progress Michigan, the Michigan Land Use Institute, and other statewide and local groups—said the utility’s cost projection for wind power, a major part of its renewable energy plan, was about 60 percent too high.

Consumers claimed a price of $174 per MWh for wind, while Detroit Edison, which had to perform a similar estimate, came up with $108. According to James Clift of the Michigan Environmental Council, that meant Consumers’ clean energy would cost about 19 cents per KWh, while Edison’s would cost just 11.5 cents.

“The Detroit Edison numbers are based on real contracts, with real people putting up real wind farms, and their numbers are 60 percent below what Consumers is saying,” Mr. Clift said. “We are saying if that is the best you can do, then don’t bother. Let other people do it and Consumers can buy its clean energy in the marketplace. They are showing they are incapable of bringing renewables to the marketplace.”

“We believe renewables are cheaper, and that new coal capacity is clearly going to be more expensive, and they are going to have a hard time convincing people otherwise,” Mr. Clift added.

Mr. Clift tied Consumers’ high estimates to the company’s efforts to justify the $2 billion price tag attached to its proposed Bay City plant.

“At a time when we face the threat of global warming, and consumers are struggling to pay their bills, we have to get this right,” he warned.

The MPSC subsequently approved Consumers’ renewable energy plan, but ordered the company to reduce its green surcharge from $3 to $2.50, and warned that it might not approve other proposed, clean energy-related charges in the future if they are too high.

The surchage will show up on customers’ bills for five years, and the company says it will use the money to help finance its $1.2 billion program to add about 900 megawatts of renewable energy to its generating capacity.

Consumers spokesman Jeff Holyfield told the Great Lakes Bulletin News Service that Consumers is complying with all MPSC orders regarding its renewables plan, and that the criticisms of its green surcharge are unwarranted.“I’m not going to get into comparing (Detroit Edison’s) plan with our plan,” Mr. Holyfield said. “We are different companies...but I can tell you we are doing our absolute best to provide renewable energy as part of our portfolio and to simultaneously serve our customers in the most cost-efficient manner possible.

“Until you come into the marketplace, you don’t know what the cost of this power is going to be,” Mr. Holyfield said. “We have to see what kind of responses we get from the marketplace ...you can sit in a room with calculator and spreadsheet and play with the numbers all you want, but until you have to go out and do the easements and do the (wind feasibility) studies, it’s all theory.”

Glenn Puit, a veteran investigative reporter, is a policy specialist for the Michigan Land Use Institute. Reach him at glenn@mlui.org.

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