Changes In Economy And Energy Markets Behind Coal Plant Deferral

The economic downturn has affected budget and investment decisions for many of us. For some local governments it has meant a delay in equipment purchases or investments in new facilities. The same is true at Consumers Energy. The recent announcement to defer development of our 830-megawatt clean coal electric generating plant is a result of the sluggish economy and changes in energy markets.

Some of the changes we have seen since the plan for the plant was introduced in 2007 include:

"We remain committed to our Balanced Energy Initiative which includes a diverse mix of energy resources from generating plants, market purchases, renewable energy and energy efficiency."
  • Reduced customer demand for electricity due to the recession
  • Forecasted lower natural gas prices which would lower the cost of natural gas-powered generation
  • Projected surplus generating capacity in the Midwest market

These are the main factors that led us to defer construction, not cancel, the project.

We still believe new clean coal generating capacity will be in the long-term best interests of our customers and the state, but the current timetable is not consistent with today’s market conditions. We will continually monitor customer demand for electricity, fuel and power prices, and other market conditions. Right now there is no set no timetable for a future decision about the project.

In the meantime we will continue to pursue final environmental permits for the plant, a process that has been under way since 2007.  Development of the project could resume in the future if we determine electric demand necessitates the need for more electric capacity in the state. However, we will not file a Certificate of Necessity application with the Michigan Public Service Commission in August, as originally planned, but may do so at a later date.

We remain committed to our Balanced Energy Initiative which includes a diverse mix of energy resources from generating plants, market purchases, renewable energy and energy efficiency. We also remain committed to investing approximately $7 billion into our operations over the next five years. The new coal plant made up about $1 billion of that total during that period.

We also expect to make other investments in place of the new clean coal plant, including additional environmental controls on our existing coal-fired plants. Those substantial investments are expected to create about the same number of jobs as the clean coal plant, boosting the state’s economy.