(WWJ) – Michigan Attorney General Dana Nessel and Consumers Energy have agreed to a proposed settlement that would end the utility’s use of coal in Michigan by 2025.
The proposed settlement is still subject to approval by the Michigan Public Service Commission, but if approved, it could end the use of coal 15 years earlier than Consumers had initially planned.
Consumers officials say the company will be one of the first utilities in the country to end its use of coal. The utility provides electricity to about 1.9 million people throughout Michigan and natural gas for about 1.8 million.
Consumers had plans to close two of its three remaining coal plants, but the new proposed settlement would close all three remaining plants and further actions to reduce carbon emissions.
The proposal would also call for the building of nearly 8,000 additional megawatts of solar energy by 2040, according to a press release from the AG’s office.
If “everything goes as planned,” officials say, Consumers will generate 90% of its electricity using clean energy resources by 2040.
Nessel calls that a “win for our environment,” as well as Michigan ratepayers who have “struggled to stay current on their bills,” as the settlement would provide direct financial resources to customers.
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Consumers is donating, “at the urging of the Attorney General,” $5 million in 2022 to a fund that helps low-income ratepayers, with the potential for $33 million in total assistance in additional $2 million increments over a 14-year period.
“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,” Nessel said.
The settlement agreement also provides the following:
Establishment of a regulatory asset for the undepreciated book balance of the retiring coal plants which will earn a return equal to the Company’s WACC with a 9.0% ROE and that amortizes the reg asset over a period of time consistent with their original design life of those units. And recovery of associated decommissioning and ash disposal costs less salvage value will be included in a regulatory asset which the Company may request to recover in future base rate proceedings subject to a reasonableness and prudency review.
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 Company’s generation portfolio requires prolonged operation to maintain sufficient supply (i.e., system or company reliability require continued operation).
The Company will 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 an FCM which is generally the same as the currently approved FCM for Consumers Energy.
The Company agrees to the extension of the annual competitive bidding process to acquire supply-side resources and it will use commercially reasonable efforts to maintain a 50/50 split between new capacity from Company-Owned projects and new capacity from PPAs.
Approval of the proposed battery deployment program.
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