Michigan Regulator Clears Consumers Energy’s Plan to Eliminate Coal-Fired Power, Add 5 Gigawatts of Solar

The Michigan Public Service Commission on June 7 approved Consumers Energy Co.’s integrated resource plan, which calls for the addition of 5 gigawatts of solar capacity through competitive bidding by 2030 and phase-out of coal from its generation portfolio, putting the utility on a path to achieve 90 percent emissions reductions by 2040. The plan modifies the terms of the utility’s avoided cost, which must be paid to small independent power producers under the federal Public Utilities Regulatory Policies Act, including setting a five-year planning period, instead of 10 years, to determine additional capacity requirements.

The commission authorized Consumers Energy to hold annual competitive bidding administered by an independent third party for adding power generation capacity, including 1.2 gigawatts of new solar energy from 2019-2021.  Under the plan, Consumers Energy can own up to 50 percent of solar procured through competitive solicitations, and must purchase the remaining capacity through power purchase agreements with third parties.

The plan calls for retiring the 515-megawatt Karn coal-fired power plant in 2023, nearly a decade ahead of schedule.  The utility will conduct a retirement analysis of the two units of the Campbell coal plant, and possibly retire them as early as 2025. Consumers Energy closed seven of its coal-fired plants in 2016. Coal has the largest share in Michigan’s power mix, providing nearly 40 percent of the state’s electricity in 2017.

The agency updated the avoided cost rates for energy from small power producers to be based on wholesale power prices or forecasts, and capacity rates based on the company’s competitive bidding results. The commission also authorized a financial compensation methodology for power purchase contracts with third-party suppliers, including those under PURPA.

The company said that the plan will help meet 90 percent of its customers needs through clean energy resources like renewables, energy waste reduction, and battery storage by 2040.

The integrated resource plan is the first to be filed under Act 341 of 2016, which took effect in April 2017, requiring the commission to establish modeling parameters and assumptions that utilities must follow in their resource plans to meet electricity needs over the next 5, 10, and 15 years. Consumers Energy filed an agreement on its resource plan in March, resolving disputes in the initial plan filed last year. The utility must file a new IRP in June 2021.

Consumers Energy is a subsidiary of CMS Energy Corp.