by Scott McClallen
Attorney General Dana Nessel entered a proposed settlement with Consumers Energy Company to end its use of coal by 2025 — 15 years earlier than originally planned.
The proposed settlement with Consumers Energy is in its integrated resource planning case, (Case No. U-21090), which is subject to final approval from the Michigan Public Service Commission (MPSC).
Consumers Energy filed its new resource plan in June 2021, which proposes closing early all remaining coal plants statewide. A previously approved plan in 2019 included studying the closure of two of Consumers’ remaining three coal plants.
Consumers Energy says it will be one of the first utilities in the country to end coal use completely.
The settlement agreement provides for building nearly 8,000 additional megawatts of solar energy by 2040, by when Consumers Energy aims to generate 90% of its electricity using clean energy resources.
Consumers Energy agreed to donate $5 million to a fund that helps low-income utility ratepayers.
“Not only is this settlement a win for our environment, it’s also a win for Michigan ratepayers who have struggled to stay current on their bills,” Nessel said in a statement. “This agreement was truly a collaborative effort from all involved parties and a symbol of what we can achieve when stakeholders work together to create positive change.”
The Citizens Utility Board of Michigan (CUB), a nonpartisan nonprofit that aims to reduce utility costs, helped negotiate the settlement.
“CUB applauds the AG for striking this settlement that will provide $5 million of new assistance for low-income residential customers this year and Consumers will continue to donate up to $2 million a year to this fund over the next 14 years,” CUB Executive Director Amy Bandyk said in a statement.
“Importantly, these donations will not be recovered through higher rates, but rather donated by Consumers Energy. Residential rates have been soaring over the past few years, so this assistance is a good step. We hope to continue working with the AG to win much-needed relief for ratepayers.”
The settlement agreement also provides the following:
- Establishing a regulatory asset for the undepreciated book balance of the retiring coal plants which will earn a return equal to the Company’s Weighted Average Cost of Capital with a 9.0% Return On Equity and that amortizes the asset over time consistent with their original design life of those units.
- Approval of the Acquisition of the New Covert Generating (natural gas) Facility (but avoids the acquisition of additional gas plant proposed by the Company in its application) and approval of Demand Response and Conservation Voltage Reduction capital costs for recovery in rates in future Company rate cases.
- Retirement of Karn Units 3 and 4 which are gas peaking plants on or before May 31, 2031, unless the regional system operator or other emergent issues within the generation portfolio requires prolonged operation to maintain sufficient supply.
- Conduct a one-time competitive solicitation to provide the Company with capacity credit in MISO Zone 7 starting in the 2025 planning year (including acquisition of 700 Zonal Resource Credits).
- Maintaining a Futures Commission Merchant (FCM) which is generally the same as the currently approved FCM for Consumers Energy.
- To extend the annual competitive bidding process to acquire supply-side resources and to use commercially reasonable efforts to maintain a 50/50 split between new capacity from Company-Owned projects and new capacity from Purchase Power Agreements.
- Approval of the proposed battery deployment program.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Background Photo “Coal” by oatsy40. CC BY 2.0.
