In less than two weeks, 10 Michigan coal plants that generate enough electricity to serve a million residents will be closed. Over the next five years at least a dozen more coal-fired units will also be retired. That means Michigan’s energy and electric supply needs must be addressed, and soon.
Much progress was made in the Legislature last year between the House and the Senate on a bipartisan energy package that emphasized long-term generation planning, goals for energy efficiency and room for the market to direct costs and the type of generation. These bills should meet Michigan’s needs, and the Legislature should move on them.
The bill package would establish a statewide Integrated Resource Planning process for long-term power generation that would ultimately be compatible with President Barack Obama’s Clean Power Plan.
Of course, now that the U.S. Supreme Court has issued a stay on the rules, it’s unclear whether the federal mandate will ultimately hold up. Regardless, the state expects a projected 1.8 gigawatt production shortfall by 2020, and its two main utility companies have already begun planning for the expectation that the Clean Power Plan will be enforced.
If it is upheld, a recent report from the Midwest Independent System Operator found that the CPP could force the closure of more coal plants, which would further impact electric reliability across the region.
That’s why the state needs a flexible planning process like the one laid out in these bills to integrate the most cost-effective technologies at the right times. Natural gas makes the most sense today for Michigan utilities, but as the market price for it fluctuates, so, too, could the state’s dependence.
Increased energy efficiency and renewables can make up some of the state’s needs. The legislation targets renewables and conservation to cover 30 percent of the load by 2025. Michigan is on track to meet efficiency improvements of about 1.5 percent every year.
Still, the drastic nature of so much current generation going offline so quickly means reliability must be carefully protected.
That’s why the plan Gov. Rick Snyder laid out a year ago for Michigan’s energy future requires out-of-state, alternate providers, which serve about 11,000 Michigan residents, to prove they have enough power to serve their customers for at least three years. Customers who choose alternate providers would also be required to give lengthy notice before switching back and forth.
Greater electric choice, which several legislators support, is an admirable objective. But with great reliability risks coming as coal plants go offline, the current 10 percent cap on electric choice makes sense for the short term and provides the best safeguards for all Michigan utility customers.
State leaders have known about the coming shortfall for energy and electric utilities for years, but now it’s here. Michigan needs a plan.