The Presque Isle power plant near Marquette, Michigan.

Superior Watershed Partnership

The Presque Isle power plant near Marquette, Michigan.

Michigan’s U.P. goes head-to-head with its energy future

Across the country, utilities, regulators and government officials are grappling with the complex question of how to replace the energy from retiring power plants.

On Michigan’s Upper Peninsula, that transition is playing out on a much more urgent timescale.

“We’re in a crisis right now,” said state Rep. Scott Dianda, who represents an area northwest of Marquette on the Keweenaw Peninsula. “We need to have reliable power up here. That’s the number one thing — reliable, reasonable rates for power.”

Dianda’s colleague, Democratic state Rep. John Kivela from Marquette, added: “It is our biggest issue in the Upper Peninsula, without question. It’s that dire.”

A mix of regulatory agencies, nonprofits, politicians, utilities, businesses and residents all have a stake in the next chapter, as We Energies winds down operations at the coal-fired, 450 MW Presque Isle Power Plant in Marquette — the biggest source of power in this 16,000-square-mile wilderness.

The plant will be closed “as soon as practically possible,” according to the Midcontinent Independent System Operator (MISO).

In the meantime, experts and elected officials are planning a roadmap that many hope will feature more localized, distributed sources — a departure from the centralized, expensive and transmission-heavy system of today.

All of this is piled on a region of the state with some of the highest electricity rates in the country — and it’s going largely unnoticed by the general public there.

A wide range of representatives — from the Governor’s office to local nonprofits — are scheduled to meet later this month in Marquette at an energy summit to grapple with these questions.

Transmission opposition

As Presque Isle — which is one of multiple Michigan coal plants staying open under a System Support Resource agreement with MISO — inches closer to retirement, one option is to expand transmission capacity from Wisconsin (which is closer to the region geographically than the rest of Michigan).

Kivela, however, said that would be an “unacceptable” alternative.

“Being dependent on another state for energy and the cost for transmission is basically unaffordable for our residents,” he said. “It really stifles any economic development opportunities we have.”

Last month, Dianda introduced a resolution in the Legislature encouraging the build-out of new generation in the U.P. and recommending natural gas, renewables and more localized distribution — all of which would be more cost effective than transmission lines, he said.

“One of the worst things we can do is spend $500 million on a transmission project from Wisconsin for coal and nuclear power,” said Richard Vander Veen, a renewable energy developer with an interest in renewable projects in the U.P. “That would make a few people a lot of money. If you’re an [American Transmission Company] shareholder, that’s great. But from a customer’s standpoint, I’d much rather see new state-of-the-art generating being built, coupled with efficiency.”

And those costs would be hitting a region with already high unemployment and low median incomes, said Abhi Kantamneni, an engineer at Michigan Technological University’s Keweenaw Research Center and a Ph.D. candidate in computer science.

“As this situation continues to move forward, any solution reliant on [fossil fuels] and building giant [transmission lines] will only disproportionately burden people already paying high rates,” he said.

Andy Schonert, a spokesperson for MISO, said “transmission solutions” are one of several alternatives MISO is studying leading up to Presque Isle’s retirement. Others include “generation redispatch, new generation (and) demand response.”

“Given the U.P.’s location and limited options in the region, finding alternative solutions there is more difficult than in other parts of the MISO footprint,” Schonert said in an email. “Ensuring reliability in the Upper Peninsula of Michigan is a major priority for MISO. We are currently working with stakeholders to develop a solution that will allow the retirement of Presque Isle Power Plant while providing long term reliability benefits for the region.”

An agreement to extend the SSR through the end of 2015 is before the Federal Energy Regulatory Commission, according to a We Energies spokeswoman. Under that agreement, We Energies would receive $8 million a month to operate the plant and make pollution upgrades to comply with federal regulations, increased from the $4 million a month it receives now. It’s unclear how exactly those costs will be distributed among customers in the U.P.

Still, Schonert said that distributed generation and demand-side efficiencies presently wouldn’t be enough to meet that region’s load.

“Some level of distributed generation along with demand-side solutions could be effective in reducing the total amount of local generation required, however it is not realistic to expect that the entire load could be met without adequate local generation and/or transmission supplies in that area,” he said. “MISO believes that a practical solution is some combination of new generation and transmission lines in that region which may take at least 3-4 years to implement.”

Industry vs. small users

The future of the Presque Isle plant was thrown into question when one company — Cliffs Natural Resources, with 85 percent of the plant’s load — switched to a provider with cheaper prices because of an exemption in Michigan’s energy choice law.

Robert Kulisheck, a former Marquette mayor and city commissioner and professor emeritus of public policy at Northern Michigan University, believes that smaller consumers are at a disadvantage compared to large users like Cliffs.

“Now that they are operating under a deregulated market up here, it seems smaller entities don’t have the same capacity to compete on the open market that big players like We Energies and Cliffs do,” he said. “It seems like there’s a need for some intervention from the state or feds to make it a more fair playing field.”

Then there is the question of who should bear the costs of keeping Presque Isle open. Cliffs still technically receives energy from that plant, even though it doesn’t pay We Energies for it. FERC has ruled that a bulk of those costs should come from Michigan utilities and their customers. One co-op asked FERC last month to reconsider its decision.

“We’ve said for quite a while: Cliffs Resources, which owns the Empire and Tilden mines, should be responsible for paying the costs and true costs of the electricity that they need to serve their operations,” said Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center. “Whether it’s through their own facilities, or through a transmission line or through Presque Isle, Cliffs Resources shouldn’t be allowed to impose financial or pollution costs on the public.

“Cliffs Resources is the cost-causer for much of the Presque Isle coal plant but it doesn’t want to pay the fair costs of the electricity being generated for its beneficial use.”

In an open letter to Michigan Gov. Rick Snyder, Keweenaw Renewable Energy Coalition President Melissa Davis writes: “Our region is home to a disproportionate share of low- to moderate-income households, who spend a disproportionate amount of their gross income on utility costs. A further rise in electricity costs could prove devastating.”

Building momentum for renewables and natural gas

Davis’ letter goes on to promote the renewable potential in the U.P. — particularly solar, wind along the shores of Lakes Superior and Michigan, geothermal “due to our vast flooded copper- and iron-mine reservoirs” and woody biomass.

“I’m not against solar or wind,” state Rep. Dianda said. “But up here we do have the luxury of having a lot of biomass with the forests and ways of looking at many different aspects of biofuel.”

Kantamneni, who moved to Houghton, Michigan a few years ago without having a particular interest in renewable energy, said local, distributed sources started making sense when he ran the numbers.

“I’m convinced distributed generation is the future for the U.P. and Michigan. When I moved to Houghton, I wasn’t convinced about the merits of renewables,” he said. “Having looked at how the technology has caught up today, I think the only challenge to renewable integration into the grid is a lack of vision and renewable policy from the state.”

While these may benefit the overall energy diversity of the region, Kantamneni says that to satisfy the energy needs of high-end users like the mines, “Natural gas might look like the answer.”

Still, Kantamneni warned about placing “eggs in one basket” and being tempted by cheap natural gas prices. “Down the line, who knows where gas prices might be?” he said.

Vander Veen said he’s helping put together a 20-year plan for the U.P. that starts with educating the public about what’s going on.

“It’s not good enough for people to be oblivious. Unfortunately, a lot of people are just that. They don’t see a problem, they’re not prepared for oncoming [energy] prices,” he said. “Part of me wonders if it takes a crisis.”

Consensus, Vander Veen says, is what it takes to get these projects in motion.

“If we’re closing coal plants and we need more generation in the U.P., where does that come from? Shouldn’t it be utility-scale wind or solar, and probably a gas plant or two or three?” he wondered.

Vander Veen says he’s “laying the ground work to do wind and solar in the U.P.” and he also believes utilities should be “empowering” residents to generate their own energy.

The latest (and which many see as good) news is that Cliffs is considering building a natural-gas powered cogeneration plant with Invenergy Thermal Development LLC.

Learner, of the Environmental Law and Policy Center, said it’s a “very different situation” should Cliffs generate its own power onsite.

“Then there’s very little load left for Presque Isle to serve,” he said.

State Sen. Tom Casperson, a U.P. Republican, says throughout the region, natural gas and biomass should be the immediate focus. He believes wind is too contentious of an issue — in which “some families won’t even talk to each other anymore” over and as evidenced with yard signs attacking wind — to push forward as an alternative.

Casperson said that, along with Cliffs’ choice to leave We Energy, EPA pollution rules (which, like many other critics, he dubs a “war on coal”) are contributing to an immediate closure of Presque Isle, exacerbating the situation.

In the short tem, state Rep. Kivela predicts Cliffs will build a natural-gas plant for itself and a second “small but expandable” generation facility will come online elsewhere.

“ATC is making a run saying transmission is what we need. We don’t find that acceptable,” he said. “We’re going to be prepared to halt that if we can.”

Dianda suggested a “permitting fast track” in the next two years as more generation projects surface.

“It’s going to be tight, but we have to do it,” he said. “We have no choice.”

Kantamneni, of Michigan Tech, suggests a “bottom-up” approach to solving the U.P.’s power problems, with communities becoming self-reliant when it comes to generation.

“This whole top-down approach of passing legislation to solve problems leads to problems like we’re facing right now,” he said, referring to the energy choice exemption the mines received that allowed Cliffs to leave We Energies. “Small communities, at this point, will have to start to diverge from the government’s larger agenda of supplying energy to high-end customers and people will come together. That’s the hallmark of being American, isn’t it?”

9 thoughts on “Michigan’s U.P. goes head-to-head with its energy future

  1. Re-powering Coal Plants – Maybe with the abundance of biomass in the UP, this alternative might get some attention. Please take a look at
    http://www.treefreebiomasssolutions.com/#!sustainability/c1rxz
    and read about Oregon’s Boardman Coal Plant which is slated to be retired as a coal-fired unit and to be re-fired on torrefied biomass. Could be a solution in the UP or any number of coal plants slated for closure.

  2. With Cliffs purchasing their power from elsewhere, and considering generating their own, WHY is MISO requiring the continued operation of the Presque Isle Plant when Cliffs was 85% of the plant’s load?

  3. Good question Jay,
    The Presque Isle Power Plant (PiPP) is the largest generation facility in the Upper Peninsula.
    If you think of the grid as a giant bucket, there are generation facilities like PiPP dumping energy into the bucket, and consumers like Cliffs taking energy from the bucket. With Cliffs purchasing power elsewhere, it simply means that Cliffs will continue to draw from the giant bucket, but will pay someone else for that energy.
    However, MISO argues that in order for the grid to maintain reliability, that is, to maintain the balance in the bucket, PiPP has to continue to fill that bucket.
    Please understand that this is a simplification, and should serve as an analogy.

  4. This article describes the issues and the urgency well. There are also projects going on right now to address these challenges.

    To provide assistance in the short term, the Superior Watershed Partnership manages several projects to help people with energy costs. Some of these also provide energy audits to reduce costs going forward. Learn more at http://superiorwatersheds.org/assistance.php

    In addition, a Community Wind Power guide is available here: https://itunes.apple.com/us/book/community-wind/id640434834?mt=11 A climate adaptation plan proposes actions for the Lake Superior watershed side of the UP. http://www.superiorwatersheds.org/images/climate-jan.pdf A new plan for the Lake Michigan/Huron side will be done by the end of the year.

  5. This indeed is an unusual situation. In the rest of the US there would be many interconnections and inteconnected generators and large customers. In this case you have one large user and one large transmission line and one large plant. The plant(PiPP) was originally built by and for the one large customer. If that customer did not exist the need for PiPP and the existing 345kV would seem difficult to justify.
    Interesting.

  6. The Copper Country is also uniquely suited for low-grade geothermal heating and cooling. For 100 miles or more, communities sit atop flooded abandoned mine assets, by definition, as “mine locations” like Calumet strove to limit the distance they had to drill into bedrock & move their local mining population to & from work. With temperatures that we have documented between 53 and 62 degrees year-round, current heat pump technology can generate 150 degree water–more than enough for efficient heating, and even better for cooling. Believe it or not, our hospitals and schools have cooling loads equivalent to heating loads at peak, and this “compromise” minewater temperature doesn’t get any better. And if wind & solar are off our politicians radar–even given what the Open Letter to Governor Snyder clearly points out–low-grade geothermal isn’t even understood. The U.P.’s copper and iron ranges alone could set precedent and lead the U.S. And it’s not intermittent@! 24/7, green, with heat only removed & the water put right back downhole. I challenge anyone to devise something better to revitalize our stifled communities.

  7. Ever think that the control of the “independent minded” upper peninsula populous by Govt. is achieved thru financial control, regulations,fees and taxes. Why not reward the independent spirit by empowering individuals to develop their own power sources thru grants and incentives, “$”. They are not looking to help but to hinder independence. Look up the UN Project 21

  8. 10/11/2014

    I came across a post stating to sign a petition dealing with the Presque Isle Power Plant in Marquette, MI and the electrical hikes that will be forced on all Upper Peninsula electrical consumers. Apparently Presque Isle, since it is coal, will need EPA upgrades and will need all operation costs paid by all U.P. residents, a whopping $116 million dollar bill! This will raise customers’ bills $30 plus dollars depending on the usage. This situation sounds like the big cats forcing change at such a rocketed rate that most customers will not understand what is going on until it is too late. This is the fleecing of the U.P. Everyone will be overcharged even though most are not going to ever benefit from the power. If the EPA really wants to keep Presque open and upgrade it, then they need to give communities a proper timeline to figure out an alternative that benefits the majority. According to Balaskovitz’s 2014 post titled, Michigan’s U.P. goes head-to-head with its energy future, if Cliffs is going to “build a natural-gas plant for itself and a second “small but expandable” generation facility” which would take most of the load off of Presque. So my question to the EPA is why is Presque such an immediate initiative? Should we not let Cliffs do this and let the people of the Upper Peninsula sidestep a devastatingly high hike in electricity costs? The EPA does not need to force Presque to upgrade since there is already a plan of action starting to emerge with Cliffs solving 85% of the power load supply and Presque Isle reportedly requested to be closed previously. Why would the EPA want it to remain open when viable options are available?

    I am outraged that the EPA and elected representatives and politicians would think that raising a customer’s electrical costs thirty-dollars for 1,000 kWh and $500 for those who use 15,000 kWh, starting in January 2015 would be okay (Cloverland). January is the start of the coldest part of winter when power is needed to heat homes, cook, and do daily tasks. Upper Peninsula residents already have to do more with less. This type of hike in electrical costs will not only devastate the general public, but also businesses and schools that use large amounts of power. Residents do not deserve this treatment. Coal and water were viable options when the plants were created. Now what is the best way to move power generation into the present day with the attention on the future? When does the public get to vote on how electricity is generated?

    I think a bit more transparency is needed in all areas of government from local to the top. I am tired of this idea that government, at any level, is able to make a decision that impacts everyone without even consulting with those whom they represent. Together we can find the best solution for this problem, but it will take time. Rushing into decision of this magnitude will only result in the hurting the consumer’s pocketbook in the end and being left with the poor choice of a hurried decision.

    I would hope the EPA would extend a timeline so that the people of this great area can come to a consensus of what they would be willing to pay for and pay towards. Paying towards a plant’s upgrades only to have that plant closed anyways because it is coal is ridiculous. What are the options? What is the best route for the future of power generation in the U.P. that will have the least impact on already overstretched pocketbooks? It sounds like the best option here would be to entertain the idea of Cliffs creating their own power plants and then allowing another small plant of geo-thermal or natural gas to fulfill the remaining power needed. In the meantime, committees can be looking ahead and researching what the best move would be in case this issue comes forth again.

    We all need to upgrade to newer technologies at some point, but it should not be rushed just because Presque is a coal plant. The quality of the people’s lives should always be considered first when large scale changes are to be made. If the quality suffers, then the idea should be rejected and an alternative found. I will end my post with one last question. What ulterior motive is encouraging those who have the power to push this flawed idea through?

    Sources:
    Balaskovitz, A. (2014). Michigan U.P. goes head-to-head with its energy future. Midwest Energy News. http://www.midwestenergynews.com/2014/10/06/michigans-u-p-goes-head-to-head-with-its-energy-future/. Re-Amp.

    Cloverland.com. Call to action. Cloverland Electrical Cooperative. http://www.cloverland.com/homepageScroller/calltoaction_copy1.aspx. Apogee.

  9. As a former resident of Marquette and now an owner of property in Autrain I am appalled at the gall of CCI and the EPA. When the big money talks, mountains are moved. When the people talk, the mountain movers are like deer caught in headlights and don’t know what to do.
    I’m in favor at looking at all alternatives, including wind and solar.