How much will closing 25 coal plants cost Michigan ratepayers?

[November 03, 2015]  By Rob Nikolewski  

Plans to shut down 25 coal plants in Michigan over the next five years has been heralded as a big step toward cleaner air in the Great Lakes State, but how much more it will cost ratepayers during the transition is unclear.

It’s expected the plants will close via a combination of tougher regulations by the U.S. Environmental Protection Agency and the coal plants reaching retirement age.

Michigan derives more than 50 percent of its electricity generation from coal-fired power plants.

The largest utility in Michigan, Consumers Energy, said it will spend $2 billion on upgrades on five of its newer coal plants to ensure they comply with the provisions of the just-enacted Clean Power Plan, which President Obama called “the single most important step America has ever taken in the fight against global climate change.”

Consumers Energy says it plans to retire seven of its oldest coal plants and coal units by April. Those seven facilities make up 30 percent of the company’s total generating capacity.

How will the state make up for the loss? Largely by transitioning from coal to natural gas-fired power plants, which generally burn cleaner than coal, importing power through a regional grid and using more renewable energy.

But finding out how much the move will cost everyday consumers of Michigan electricity isn’t easy.

Watchdog.org asked the media office at Consumers Energy, but we didn’t get a response.

A spokeswoman for the coal industry predicted Michigan ratepayers will pay a lot more in the very near future.

“People in Michigan are already struggling to keep their heads above water in this economy,” said Laura Sheehan, senior vice president for communications at the American Coalition for Clean Coal Electricity. “Taking them off reliable coal-based power is only going to make their lives more difficult.”

Sheehan’s group cites figures produced in April using energy consumption and price data, as well as projections from the U.S. Department of Energy’s Energy Information Administration. According to projections, EPA’s proposed carbon rules for existing power plants will increase electricity prices in Michigan by at least 12 percent.

EPA doesn’t break down potential rate increases or decreases by state for the Clean Power Plan. EPA Administrator Gina McCarthy has said that, for every $1 spent on the cleaner standards, the public will see $7 in health benefits.

In a statement to Watchdog.org in June, the agency projected the plan will “increase energy efficiency and reduce growth in demand for electricity. This means that in 2030, when the plan is fully implemented, we expect electricity bills to be roughly 8 percent lower — savings of about $8 a month on an average monthly residential bill — than they would have been without the actions in state plans.”

Earlier this year, the Obama administration estimated the new rule would cost $8.4 billion a year by 2030.

RELATED: Will the EPA’s Clean Power Plan save you money or clean your clock?

James Clift, policy director for the Michigan Environmental Council, thinks ratepayers in the state won’t see any more of cost increase than they have in the past.

“If you look at our rate increases, and it depends on what rate class you’re looking at, residential ratepayers over the last 10 years have been looking at (increases of) six percent a year,” Clift told Watchdog.org.

“We don’t see anything out there that shows the other forms of meeting demand — energy efficiency programs, renewables, natural gas — are running that much higher than it was costing us to run very old coal plants.”

The Clean Power Plan has been called the most sweeping regulation in EPA history, covering an estimated 2,417 fossil-fuel-fired power plants that account for 39 percent of the nation’s CO2 emissions — the largest single source.

“The Clean Power Plan will maintain an affordable, reliable energy system, while cutting pollution and protecting our health and environment now and for future generations,” EPA says on its website, emphasizing the Clean Power Plan offers states flexibility to devise “building blocks” to meet emissions reductions.

DTE, Michigan’s second-largest electric utility, plans to shut down two coal units at its Trenton Channel plant by next April, leaving the company with about 15 coal units.

But most of those facilities will be eliminated in the next 15 years, Skiles Boyd, DTE vice president of environmental management and resources, told the Detroit Free Press.

“There is no piece of control equipment we can put on to meet carbon rules under the Clean Power Plan … there really isn’t anything economical to collect carbon,” Boyd said. “So, by 2030, our rough scenario is probably only Monroe will be remaining,” referring to DTE’s coal-fired Monroe Power Plant.