Michigan electricity providers are making good progress toward meeting the state’s 2015 renewable-energy mandate, mainly because of a sharp drop in wind-power generation costs, a recent state Public Service Commission report found.
The commission also says the cost of renewables is lower than the projected cost of producing electricity from a new coal-fired plant.
Spokesmen for DTE Energy and Consumers Energy, the state’s two largest electric utilities, wouldn’t comment on whether the utilities agreed with the commission’s cost comparisons.
“Wind is the cheapest resource to bring large amounts of renewable energy online,” said Julie Baldwin, manager of the commission’s renewable energy section. “It’s hard for other sources to be competitive.”
The most recent wind contracts approved by the commission have costs of between $61 and $64 per megawatt hour. The commission has estimated the cost of power from a new coal-fired plant at $133 per megawatt hour. But in a recent rate case, Consumers Energy pegged the cost at $107 per megawatt hour.
Consumers Energy cited lower coal costs and updated assumptions about the cost of emissions regulations in its estimate. But the commission said it "continues to believe there is merit" in its $133 per megawatt cost estimate.
Other renewable sources of energy are more costly than wind, but still cheaper than the projected cost of power from a new coal plant, according to the report.
Prices for wind energy are falling as the giant turbines that produce it become more efficient. As a result, Consumers Energy last year reduced its renewable energy surcharge from $2.50 to 65 cents a month.
Energy companies are allowed to charge as much as $3 per month to residential customers to offset the cost of renewables.
A 2008 law requires the state to get 10 percent of it electric power from renewable resources by 2015. Michigan was producing 3.6 percent of its power from renewables at the end of 2010.
Those renewable energy sources include wind, solar, hydro, landfill gas and biomass, such as municipal solid waste. Producing electricity from all those sources was found by the commission to be cheaper than producing power from a new coal-fired plant.
Ninety-four percent of Michigan’s renewable energy contracts are for wind power, according the commission’s annual progress report on meeting the renewable standard.
That percentage is likely to rise as several new large-scale wind farms come online this year.
“As new renewable energy projects become operational, many by the end of 2012, Michigan’s renewable energy percentage is expected to increase significantly,” said commission Chairman John Quackenbush.
The commission said more than $100 million has been invested by electricity providers to meet the state’s renewables standard. But its report did not determine how many jobs have been created as a result of the requirement.
The average retail price for electricity for residential customers is 11 percent higher so far through 2012, compared to the same period in 2011. Adjusting for inflation, the January 2012 average rate is 23 percent higher than in the same month in 2006.
Meanwhile, a group of environmentalists, labor organizations and alternative energy businesses already are pushing for a sharp increase in Michigan’s renewable energy standard.
The “Michigan Energy Michigan Jobs” coalition is collecting signatures to put a proposal on the November ballot that would constitutionally require the state to get 25 percent of its power from renewables by 2025.
Boosting the standard would bring $10 billion in investment to the state and create 44,000 jobs while reducing Michigan’s dependence on out-of-state coal, the group claims.
“This is a jobs initiative,” said coalition spokesman Mark Fisk. “Right now we’re importing billions of dollars of coal from other states and oil from the Middle East. We’re sending all that money and jobs out of Michigan.”
Under the proposal, electricity providers could not raise a customer's rate by more than 1 percent a year to meet the higher renewable standard. That would work out to $1.25 a month for residential customers, Fisk said.
Backers say clean energy sources such as wind and solar would improve the health of Michigan citizens and make the state a leader in renewable energy standards.
Of the 28 states with a renewable energy requirement based on percentage of power, Michigan's 10 percent standard is the lowest.
Most of the other Great Lakes states -- Minnesota, Ohio, Illinois, New York -- have renewable standards of at least 25 percent. Ohio's standard allows for nonrenewable, alternative energy sources such as nuclear and clean coal. Wisconsin's requirement varies by the utility, while Indiana uses a renewable goal, not a requirement. And it should be noted that in many states, the renewable standard does not have to be met for at least another decade.
Consumers Energy and DTE Energy say they are opposed to the proposed 25 percent renewables standard in Michigan because of reliability concerns.
“If it’s the middle of the night and there is no sun or wind in Michigan, you could have a problem,” said Consumers Energy spokesman Dan Bishop. “Our baseload plants have a critical role to play in the reliability of the system.”
Fisk said states such as Iowa, Minnesota and Illinois have 25 percent renewable standards and aren’t experiencing reliability issues.
And another group -- this one of Republican House members -- filed a bill last month to repeal the current 10 percent standard.
The utilities say Michigan’s 10 percent renewables standard was enacted after much study and discussion, and should remain unchanged.
“We think the 10 percent requirement makes sense,” Bishop said. “Let’s let the current law play out."
Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.