State sails toward renewable energy mark

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.

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Comments

Hardvark
Tue, 04/10/2012 - 9:36am
How could it be possible for the Public Service Commission possible report that renewable energy is more costly than new coal fired power? If you have a pre determined result, you can fudge the assumptions to reach that conclusion. If Michigan is to have any manufacturing future, we have to provide the cheapest energy of any state. Corporations are looking for lowest cost labor, energy, transportation and material costs. So saying we want to be as green as every other state is not in the best interests of the state for economic development. It is one thing to play around with experimental renewable energy as a sideline, but the private sector market should be the driving force that makes that decision, not some government agency that thinks it knows better. It is easy to lead the people in the wrong direction when you don't disclose the unintended consequences of "feel good" legislation. In Minnesota, I was given the choice of paying more to buy wind generated power from the Rochester Power Company. That should be the option here if the State really wants to represent the people. If more and more customers are willing to pay the cost of renewable energy, there will be a defined market the power companies can serve. But why should government force lower income households to pay more for their energy when we currently have an excess on the grid?
Matt
Tue, 04/10/2012 - 6:35pm
The problem you site is even worse than you explained it. Each person who chooses to use only "green power" still likely expects that they will be served with electricity "when the wind stops blowing or the sun stops shining". This means we need the same baseload generating capacity and infrastructure always at hand running being paid for by rate payers so the greenies can jump in or out at their need. And in the end nothing was accomplished! ... Unless the Greenies are willing to go off the grid totally and go brown or black what ever the weather gives. FAT CHANCE.
David Waymire
Tue, 04/10/2012 - 6:48pm
Matt: Are you aware that there is a substantial amount of nuclear and natural gas fired capacity in Michigan...And that the win is almost always blowing somewhere? Yes, you need some baseload. But don't forget, base load goes down too...and when a huge plant goes down, it's a huge issue. If one bunch of windmills goes down, while others are running, nobody notices. Bigger issue is the way we handle renewable power here...by forcing it all to go through the major utilities, instead of allowing businesses to purchase the power directly from renewable providers. That's the real sin of our current electric system, which is the result of 2008 laws written by the utilities, who took the environmentalists to the cleaners, got a monopoly, and now have saddled Michigan families and factories with the highest electric rates in the Midwest -- and no competition to hold down the rates. When will the Legislature move to bring free enterprise and competition to our electric system, which is working will to hold down rates in Ohio and Illinois? Visit www.customerchoicecoalition.com to learn more.
Matt
Tue, 04/10/2012 - 7:59pm
David Wind mills are never part of the base load - by definition. Consumers is using them to fill their pond (a battery) in Ludington, but most Uts don't have that option. Two other problems, we don't have a national or even really a statewide grid (or one that is advanced enough) to handle what you envision. And... no way to pay for one. Further if nukes are OK with you, why mess with undependable wind and remaking the grid? Let's go that way. I believe you are correct that Michigan has the highest rates in the area but this isn't because we are lacking wind mills but rather layers of poor legislation. And I agree with you in not trusting the utilities. They will throw the consumers under the bus for any feel good PR idea that they would be allowed to stick in the rate base.
Doug
Sat, 04/14/2012 - 7:35pm
David - Remember wind machines only make power in a narrow window of wind speeds. Normally they start making power at about 10 meters per second and stop making power at 20 meters per second. While the wind is blowing somewhere, it has to blow within this specific range. If Michigan really wanted to create jobs, they would design and build wind machines that work in either a wider range of wind speeds -OR- would work in different wind speed ranges.
Charles buck
Tue, 04/10/2012 - 3:57pm
My comment got deleted or lost in cyberspace. I repeat the essence: Beating the drum for wind power generation is fatuous. The technology is not cost effective and has yet to prove itself vs natural gas, and even in some cases coal fired generation. The European nations who flocked to wind mills are regretting it. T. Boone Pickens is trying to dump his multi-billion dollar gamble on wind turbines into Canada. Let's keep Michigan's beautiful landscape free of these monstrous machines.
Jesse
Wed, 04/11/2012 - 5:45pm
Did any of you leaving comments read the article. Wind generated power is cheaper then coal plant power. Wind technology works, gas is king at the moment and setting the electricity price artificially low. Look at gas prices over the last 10 years and you tell me what the future holds for gas. The commission's goal is to protect the ratepayer for unnecessary rate increases requested by the utilities. Wind contracts are in the 3.5 to 5 cent/kwh range. Please look at your last electric bill and see what you paid per kwh. When you pick your jaw up off the floor from getting ripped off you should call your electricity provider and ask when you can get cheap wind for your house. If you keep drinking the pro coal anti EPA kool-aid eventually we all get poisoned. 40% of coal is being shipped to China, do you ever think that has something to do with the higher cost to produce electricity from coal? Please do your research before commenting.
Doug
Sat, 04/14/2012 - 7:39pm
Jesse - Wind power is cheaper than A NEW Coal fired power plant with a 20 year life. This is what the MIPSC numbers are based on. 1) Show me any coal fired power plant that has a useful life of 20 years (most run 50 years or more). 2) The fuel basis used by the state to calculate this assumed a rising coal price, which has not been true in a decade. 3) AEP wholesales electricity from coal for roughly $40 a Megawatt hour most days and times (this changes at peak hours, when the price can rise to $12,000 for spot power). In short, you need to know the facts behind the numbers before you buy the headline.
Mark
Wed, 04/11/2012 - 6:23pm
A lot of you are missing the point which is that new wind power is now a LOT cheaper at $61/ MWH than new coal plants at $107 MWH or $130 MWH . And this gap will only grow as we sell more and more of "our" taxpayer-subsidized coal to China and India. As Americans you should have a little more faith in market forces and free enterprise. I refuse to bet against Good old American ingenuity. It has and will continue to solve the minor technical problems associated with wind power. In Michigan we have the second oldest coal plants in the country and they regularly break down or are shut down for maintenance - talk about unreliability! Why shouldn't we replace these old fossils with at least SOME of the new and cheaper wind turbines? I know a lot of folks from Colorado who sell coal to us at $5 billion per year wish we would forget all about wind, especially that super high quality wind coming off the Great Lakes that doesn't seem to ever quit.