Rolling Blackouts Warning: 'Looming Crisis' or Political Ploy?

DTE Energy operates this coal-fired plant at Monroe. (Photo via Wikipedia/Creative Commons)

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Michiganders living on the Lower Peninsula should steel themselves for more rolling blackouts and electricity shortages as coal plants are closed under federal air pollution mandates, the state’s two largest utilities said.

DTE Energy and Consumers Energy customers could experience the fallout from reduced electricity generation capacity as early as 2016, The Jackson Citizen Patriot/MLive reports.

The potential loss of 1.3 gigawatts of generating power is equivalent to the amount of electricity needed to power Detroit, Grand Rapids and Lansing, according to a recent report commissioned by the two utility companies to study the effect taking nine coal-fired power plants offline over the next two years.

The 24-page report, compiled by the Lansing-based Public Sector Consultants Inc., is called Electric Reliability in Michigan: The Challenge Ahead. In it, both DTE and Consumers Energy say it could take as long as six years to get new natural gas plants online.

State Sen. Mike Shirkey, a Clear Lake Republican who sponsored legislation to open Michigan’s energy market to full competition while serving in the Michigan House last year, is skeptical of the utilities’ dire warnings of “a looming crisis.”

“If there were” an imminent crisis, he told the Citizen Patriot, “both utilities would be working toward a solution” and have “shovels in the ground” on projects to restore power generating capacity.

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Jackson-based Consumers Energy says it isn’t willing to build new generating facilities to replace the plants that are being shuttered – either because they’ve reached the end of their productive lives, or because of state or federal regulatory issues – without a fully regulated market that ensures a stable customer base.

“We make billion-dollar bets,” Consumers Energy President and CEO John Russell told the Citizen Patriot. “We want to make sure our investments will pay off for us when we spend that kind of money to build a new plant, and the current climate is too volatile.”

Eliminate Customer-Choice Cap to Lower Rates?

State Rep. Aric Nesbitt, a Porter Township Republican who chairs the House Committee on Energy Policy, has introduced legislation to fully regulate the market. But myriad proposals to wholly deregulate Michigan’s energy market are also before lawmakers in Lansing.

Gov. Rick Snyder wants to reduce Michigan’s dependency on coal-powered electricity and increase natural gas usage. He has proposed a plan that would preserve the 10 percent customer choice cap, but increase the amount of the state’s energy portfolio generated by renewable sources to 19 percent by 2025, up from the current 9 percent.

The customer-choice cap limits the number of business customers that can leave either DTE or Consumers Energy in favor of lower-priced electricity from Michigan’s 24 licensed alternative energy providers, according to Crain’s Detroit Business.

The large utilities reluctantly supported the cap in 2008, but more business customers than expected looked to alternative energy sources during the Great Recession, Ken Sikkema, Public Sector’s senior policy fellow, told Crain’s.

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“The state has a responsibility to solve the problem” of potential future power generation shortages, Sikkema said. “When the energy choice law was passed, the state made it difficult for utilities to plan for the future.”

If the caps were removed altogether, energy companies would be forced to reduce their rates to keep consumers, Wayne Kuipers, executive director of Energy Choice Now, a coalition of consumers, businesses and alternative energy suppliers, told Crain’s.

Like Shirkey, he thinks the Public Sector report is a “scare tactic” by the utility that “does not portray reality.”

Michigan’s electricity rates are the highest among neighboring Indiana, Illinois, Ohio and Wisconsin, and also are higher than the national average, according to the U.S. Energy Information Administration.