Consumers had sought to amend its long-running agreement with National Energy of Lincoln in northeast Michigan, proposing early termination of a previous amendment that had extended the PPA
for the plant’s 18 MW of electricity to 2027. The latest proposed amendment would have resulted in closure of the plant on May 31, 2024.

In June 2023 Consumers applied for a similar early termination of a PPA with Cogeneration Michigan Associates Limited Partnership’s Cadillac Plant. The new exit date would also be May 31, 2024, from July 2028.

In both cases, Consumers Energy had argued the early terminations provide several benefits, such as “an
expected reduction in cost, which will be passed on to PSCR [power supply cost recovery] customers…”.

But commissioners raised concerns about these claimed potential savings since Consumers “would turn to volatile electricity markets to replace some of the energy output and capacity lost with the shutdown of the plants.”

“The Commission found relying on unpredictable markets for replacement supply outside of a comprehensive Integrated Resource Planning process in this manner entailed an unacceptable level of risk,” MPSC said in a statement.

Consumers had proposed replacing the capacity from the Lincoln biomass plant with a 33.6 MW solar facility and the Cadillac Plant with a 67 MW solar facility. However, the utility had itself noted in testimony that given their non-dispatchable profiles, the two solar facilities would not be able to replace all the electric capacity from the biomass plants without supplemental electricity purchases.

Commissioners said that was concerning given the Midwest Independent System Operator (MISO) has warned of tightening supplies.

Regulators greenlight solar and storage projects

The Commission also approved several renewable energy and storage projects called for in the long-range integrated resource plans of two Michigan electric utilities.

Commissioners approved DTE Energy’s application to construct a 220 MW/800 MWh lithium-ion battery storage facility at the site of the former Trenton Channel coal-fired plant in Wayne County. The battery storage project is expected to cost $460 million.

The application to build the battery facility was approved the same day DTE demolished two smokestacks at Trenton Channel.

Retired in 2022, the plant was originally built to address the needs of an expanding economy post World War I and was the fourth major power plant Detroit Edison put into operation during the 1920’s. The coal-fired plant began operating in 1924.

The plant had six turbine generators with 13 coal-fired boilers. The sixth and last turbine generator arrived by 1929. At that time, Trenton Channel was the largest project Detroit Edison had undertaken. At one point, with the expansion of the plant in 1950, the facility generated 1,060 MW of energy.

At its retirement, Trenton Channel generated 535 MW.

Beyond the actions related to the Trenton Channel site, MPSC on Friday approved Consumers Energy’s application for approval of a PPA between the utility and Freshwater Solar Project, a 300 MW solar facility in Montcalm County, with a total lifetime cost of $715.7 million.

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.