Consumers gets approval for energy plan settlement agreement

Utility claims it will help customers save an estimated $600 million through 2040.
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The plan calls for the closure of all three coal-fired units at the J.H. Campbell coal plant in West Olive by 2025. Courtesy Consumers Energy

As part of a recent settlement agreement and plan approval, Consumers Energy is on track to lead a clean energy transformation through sustainable efforts — including the retirement of coal plants and an end to its coal era.

The Michigan Public Service Commission (MPSC) in June approved an updated version of the Michigan-based utility company’s Clean Energy Plan, which was originally proposed and submitted in 2021.

According to energy legislation passed by former Gov. Rick Snyder, utility companies are required to file an integrated resource plan (IRP) at a minimum of every five years. Consumers Energy filed its first IRP in 2018 and received approval in 2019 from MPSC, which regulates utilities within the state.

Earlier this year, a judge at the Michigan Office of Administrative Hearings and Rulings for the MPSC raised concerns over certain aspects of the utility company’s 2021 plan.

After reaching a settlement agreement with proposed updates to the plan, Consumers and MPSC staff jointly filed a motion to extend the deadline on the commission’s approval decision.

The commission approved the extension and set a schedule to give participating parties a chance to file responses and present any potential evidence or arguments against it.

MPSC on June 23 ended up approving the settlement agreement on the Clean Energy Plan.

Adjustments to the plan had been made with a group of company stakeholders in addition to support from customer groups, environmental organizations, MPSC staff, energy industry representatives and Michigan Attorney General Dana Nessel.

The 20-year blueprint enables Consumers Energy to continue meeting Michigan’s energy needs while protecting the environment.

“This is a historic moment in Michigan’s clean energy transformation journey,” said Garrick Rochow, president and CEO of Consumers Energy. “The Clean Energy Plan is a sea change that positions our company as a national leader and empowers us to deliver reliable energy while protecting the planet for decades to come.”

Among several key updates, the newly approved plan will enable Consumers Energy to stop burning coal for electricity use by 2025 — 15 years earlier than originally proposed — and become one of the first utilities in the nation to go coal-free.

“This is about doing what we can to help battle climate change and help better protect the environment while also delivering affordable and reliable energy to our customers,” said Josh Paciorek, media relations specialist and spokesperson for Consumers Energy.

Currently, coal makes up about 18% of the company’s generating capacity. The plan calls for the closure of all three coal-fired units at the J.H. Campbell coal plant in West Olive by 2025.

The closure of the Campbell plant was originally flagged by the judge as a decision requiring more research, though it ultimately was approved by the MPSC.

Consumers Energy also will close the coal-fired units 1 and 2 at the D.E. Karn plant in Essexville by 2023. Units 3 and 4, which run on natural gas and fuel oil, will continue operating until May 2031, which changed after the settlement agreement from an original plan for closure in 2023.

Paciorek said the coal-fired unit closures will reduce the company’s carbon dioxide emissions by more than 73 million tons, conserve 200 billion gallons of water and avoid billions of cubic yards of coal ash.

“This is a huge victory for Michigan and our natural resources,” Paciorek said.

The closure of these remaining coal plants follows the retirement of the “classic seven,” Consumers Energy’s seven oldest coal-fired plants, in 2016. The retirement came after more than 60 years of service for the plants.

Despite the environmental benefits, closures of longtime plants make an impact on the local communities. When the previous seven plants closed, Consumers Energy worked to ensure stability and will implement the same process this time, according to Paciorek.

“When we closed the classic seven coal plants, there were no forced layoffs. Everybody who wanted a position with the company got to stay with the company,” Paciorek said. “We’re working closely with our union partners to once again follow that same model.”

He said conversations already are in place to reimagine what the local economies will look like going forward.

“It’s not lost on us that this means some of our employees’ lives will change by accelerating this coal plant retirement,” he said. “But just like we did with the previous coal plant closures, the company is going to be there for our communities that we serve.”

To supplement the output from the coal plants, Consumers Energy will ensure system reliability through other means. The company is purchasing the Covert Generating Station in Van Buren County to add to its portfolio in 2023.

Paciorek noted the addition of natural gas plants is a temporary measure to ensure energy supply as Consumers Energy bridges the gap in this clean energy transition. Overall, the use of natural gas will decrease over the next 18 years, he said.

What will increase is the company’s reliance on solar energy, which Paciorek said is the backbone of the Clean Energy Plan.

According to the approved plan, Consumers Energy will add close to 8,000 megawatts of solar energy by 2040. At that point, solar energy will comprise more than half of its electric capacity.

Additionally, the company plans to purchase 700 megawatts of electric capacity — roughly the equivalent of a power plant — from a variety of sources through a one-time request for proposal (RFP).

Solar energy can seem like an intermittent resource, especially for Michigan, but Consumers Energy will boost energy storage with battery deployment with a goal of achieving 550 megawatts by 2040 as outlined in the settlement agreement.

“On cloudier days or on days that we’re not generating as much energy from solar, we’ll be able to tap into that source,” Paciorek said.

Amid these transitions, Consumers Energy will work to deliver affordable energy for customers. Through the approved Clean Energy Plan, the company will help customers save an estimated $600 million through 2040 compared to the 2019 plan.

“We’re building a dramatically different energy landscape in which customers won’t have to choose between protecting the planet and their pocketbooks,” Rochow said.

Paciorek said a big part of these savings will involve education and helping customers better understand how they can reduce their energy use and save on their energy bills.

“There are ways to reduce your energy usage. Even in the summer, even on the hottest days, you can still cut back on energy usage and help keep your bills low,” Paciorek said.

The company recommends methods such as swapping incandescent bulbs for efficient LED lights, regularly replacing furnace filters and installing smart thermostats. During the summer season, customers can save by using less electricity between peak hours of 2-7 p.m. daily.

In addition, Consumers Energy has committed to continue funding utility bill assistance programs for low-income customers.

As part of the settlement agreement, the company agreed to donate $5 million in 2022 to a fund that provides income-based energy bill assistance to electric customers, along with $2 million in continued annual donations. These donations made by Consumers Energy and its shareholders will not be recovered in rates paid by its customers, he said.

Paciorek noted the importance of the company’s commitment to deliver reliable and affordable energy.

“Affordability looks different for everyone,” Paciorek said. “Everyone’s in a different situation, but there are options out there. As much as we are celebrating this plan for what it does to help protect the environment, we want to also celebrate the fact that this is going to help us deliver energy that’s affordable to all nearly 1.9 million electric customers that we have.”

Looking ahead, the settlement outlined additional analysis for Consumers Energy to include in its next IRP, such as total emissions, annual particulate matter health impacts, an environmental justice screening tool, projected low-income energy efficiency participation levels, transmission import capability and publicly available rooftop solar adoption rates.

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