Policy & Regulation

Michigan regulators approve Consumers Energy plan to exit coal by 2025

The Michigan Public Service Commission approved Consumers Energy’s integrated resource plan (IRP), which includes the exit of coal by 2025 and the additions of solar and storage.
Michigan regulators approve Consumers Energy plan to exit coal by 2025
Covert Generating Station (Source: Eastern Generation).

The Michigan Public Service Commission approved Consumers Energy’s integrated resource plan (IRP), which includes the exit of coal use for electric power generation by 2025 and the additions of solar and storage.

Consumers Energy’s IRP details how the utility plans to meet energy demands over the next 20 years.

Consumers Energy plans to close three units at the J.H. Campbell coal-fired power plant in Ottawa County’s Port Sheldon Township in 2025. The J.H. Campbell units have a total generating capacity of 1,420 MW. Units 1 and 2 became operational in the 1960s, and unit 3 came online in 1980.

The planned retirement reflects the utility’s direction to replace coal with natural gas and renewables.

To offset the anticipated loss of coal, Consumers will buy the Covert Generating Station, a natural gas-fired power plant in Van Buren County’s Covert Township. The 2023 addition will add more than 1,100 MW of capacity into Midcontinent Independent System Operator’s (MISO) grid service territory.

MISO is the regional transmission organization that includes much of Michigan. The RTO said in April that firm resources “will be insufficient to cover peak load of summer months.” It warned that emergency resources and non-firm energy imports “will be needed to maintain system reliability.” And it said that the need for emergency procedures will be impacted by the availability of non-firm resources.

According to the IRP, Consumers isn’t rushing to retire its D.E. Karn Generating Complex Units 3 and 4, which are powered by natural gas and fuel oil. Instead of retiring in 2023, the two units would continue operating through May 2031.

The utility plans to add about 8,000 MW of solar generation by 2040, around the time it pledges to be carbon-neutral.

Consumers also will speed up deployment of energy storage resources from 2030 to 2024, aiming for 75 MW of storage by 2027 and 550 MW by 2040. Consumers plans to conduct two solicitations for 700 MW of capacity from power purchase agreements with terms up to 10 years.

Under the agreement with state regulators, Consumers will provide several metrics in its next IRP, including total emissions, annual particulate matter health impacts, an environmental justice screening tool, projected low-income energy efficiency participation levels, transmission import capability, and publicly available rooftop solar adoption rates.

In addition, the company plans to donate $5 million to a fund that provides income-based energy bill assistance to Consumers Energy’s electric customers, along with $2 million in continued annual donations.

These donations would not be recovered in rates paid by utility customers, according to the IRP filings.

You can read more about Consumers’ IRP here.

Regarding capacity concerns, Michigan Public Service Commission staff reported that all but one of the state’s electric load serving entities either owns or has contractual rights for sufficient capacity to meet its obligations four years from now, as required by Michigan law.

The Commission noted that MISO’s 2022-2023 Planning Resource Auction found that all zones within the RTO’s territory met their local clearing requirement (LCR), or the amount of capacity that must be located within a local area to meet federal reliability standards. Local resource zones 1-7 cleared at CONE (Cost of New Entry), which for 2022-2023 is set at $236.66 per MW-day.

The commission is requesting comment from energy companies and stakeholders on matters critical to addressing capacity shortfalls and ways to bring additional capacity resources to the market to ensure reliable electricity service.

This includes whether the commission’s ban on demand response aggregation for utility customers should be lifted, whether energy storage resources such as batteries should be allowed to participate simultaneously in wholesale and retail markets, and whether the commission should implement forward capacity obligations that exceed MISO requirements in upcoming capacity demonstrations or a forward LCR applicable to Michigan load serving entities.

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