Adequate electric supplies expected in immediate term, MPSC says, but it has concerns in longer term

July 31, 2017

LANSING, Mich. – There will be enough electricity available to meet customer needs throughout Michigan in the next five years, but the Michigan Public Service Commission (MPSC) today expressed concerns about the ability of electric providers in the Lower Peninsula to meet established reserve capacity requirements.

In the near term, the regional supply outlook is critical, since part of Michigan’s needs will have to be met by importing power from out-of-state producers. Supplies at the regional level have increased since last year, but it is highly likely that Michigan will need additional capacity resources within the state, due to additional expected retirements, to meet local capacity requirements in the coming years.

The Commission’s evaluation is based on resource adequacy assessments filed by electric providers that serve customers throughout Michigan (Case No. U-18197). Regulated electric utilities, member-regulated cooperatives municipal electric utilities, and alternative electric suppliers, at the request of the Commission, all filed assessments of their ability to meet the expected electric needs of customers through 2021. The assessments must account for a utility’s expected load peak demand and their available resources to meet that demand, including power generated in-state or imported from elsewhere. MPSC Staff compiled the assessments into a report filed in the docket.

Resource adequacy – having the capacity to meet electricity demand at all times in the future, even in cases of extreme weather or major equipment outages – is fundamental to the Commission’s role and responsibility to ensure safe, reliable energy at affordable prices. The state’s new energy laws clarified and expanded the Commission’s role over resource adequacy in the state for all types of electric providers.

The report covers three areas: The largest is Zone 7, which covers most of the Lower Peninsula and is part of the Midcontinent Independent System Operator (MISO) regional resource group. Next is Zone 2, which encompasses the Upper Peninsula and most of northern and eastern Wisconsin. The smallest is a portion of southwest Michigan, which is served by Indiana Michigan Power Co. (I&M) and is in the PJM regional transmission service area.

Zone 7’s near-term supply outlook for the summer of 2018 will be adequate, given the availability of power to import, but the zone is predicted to continue to fall short of being able to cover customer needs with local resources without incremental capacity additions through demand response, energy waste reduction, and new generation facilities and/or a continued decline of load forecasts. 

The MPSC noted some significant changes which could affect Zone 7’s capacity assessment, including the potential closure of the Palisades Nuclear Generating Station in Covert Township and a change in the available capacity for DTE Electric Co.’s (DTE) St. Clair Power Plant due to a 2016 fire.

The MPSC Staff in their report said the retirement of older, coal-fired generation plants due to federal environmental requirements, age and economic considerations, was of particular concern in determining electric availability in the coming years. The retirements would affect in-state power generation and could result in capacity shortfalls if there are import constraints.

In Zone 2, there is expected to be a surplus of 6,000 megawatts (MW) in 2018/19 planning year. The Commission also said it expects Wisconsin Electric Power Co.(WEPCO) will operate the Presque Isle Power Plant prudently to serve WEPCo.’s Michigan customers. The MPSC also notes that if the construction of two electric facilities (Case No. U-18224) and a contract with Tilden Mining Co. are approved, adequacy issues in the U.P. should be lessened.

Finally, the report estimates that I&M will have plenty of power through the PJM market.

Twenty-three utilities and cooperatives filed self-assessments, including DTE, Consumers Energy Co., I&M, Upper Peninsula Power Co. (UPPCO), Upper Michigan Energy Resources Corp. (UMERC), WEPCO and the Michigan Municipal Electric Assn.

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