Consumers Coal Plant Pullback Makes National News; Gas Switch Possible
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The decision by CMS Energy Corp. (CMS) to delay plans for a coal plant expansion at Essexville follows a trend being replicated across the nation.
Coal plants not underway before the recession hit are being scaled back or canceled.
The Wall Street Journal reported erroneously that the Consumers project was estimated at $1 billion when in fact it was a $2.3 billion plan.
The Michigan utility cited reduced electricity demand and declining natural gas prices as a reason for the delay, prompting speculation a switch may be made to natural gas.
However, the national news media reported that two dozen coal plants are still on track for construction in the next few years.
The Midwest utility stressed in a statement the $1 billion project forecast to be operational in 2017 hasn't been canceled, but it didn't provide a new timeline for construction.
Business Week, also citing the $1 billion price tag, said another factor in the delay was excess generating capacity, reportedly due to lower consumer demand.
"More electricity is being generated with natural gas since prices have tumbled," the magazine stated. "Gas supplies are abundant and it burns cleaner than gas, emitting about half the carbon dioxide as coal.
"The company will continue to monitor demand, fuel and power prices and other market conditions, but has set no schedule for a decision on the future of the plant."
The Sierra Club and the Natural Resources Defense Council have filed an appeal in Ingham County Circuit Court of a state air permit that has been issued for the plant.
The action against Michigan Department of Natural Resources and Environment and Environment (DNRE) contends the department failed to set emission levels that reflect cleaner fuels. It also asserted the department improperly rejected alternatives like energy efficiency and renewable energy sources.
Shannon Fisk, an attorney with the Natural Resources Defense Council, said Consumers' decision on the plant "is a great victory and clears the way for Consumers and Michigan to make more investments in energy efficiency, wind and solar power.
"Consumers' decision is to the benefit of ratepayers, shareholders and Michigan residents," he said.
The 830-megawatt project, announced in 2007, received an air permit last year. Utility officials estimated the plant's output would serve a community of around 530,000 residents with electricity.
Consumers joined growing list of shelved projects, including Blackstone Group L.P.'s (BX) Sithe Global Power decision to cancel a coal-fired plant under development in Nevada and switch to natural gas generation for the facility.
"The current timetable for the new unit isn't consistent with today's market conditions," CMS Chief Executive John Russell said in the company's statement.
The utility cited declines in electricity demand because of the recession, surplus generating capacity, and discoveries and natural gas drilling technologies boosting gas supplies and lowering prices--a trend expected to persist.
CMS plans to spend $7 billion in the next five years on power and natural gas infrastructure, shifting the $1 billion planned for the coal plant to other areas such as gas storage, electricity grid upgrades and environmental work on its existing coal-fired plants.
Several of these old plants were scheduled to shut down following the start of the new plant. Whether that part of the plan will continue has not been announced.
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