The impending closure of the Otto E. Eckert coal plant is one factor guiding Lansing, Michigan's utility planning process.

Jeff B. / Creative Commons

The impending closure of the Otto E. Eckert coal plant is one factor guiding Lansing, Michigan's utility planning process.

Michigan’s capital city offers glimpse into utility planning future

A key component of energy plans being pushed through the Michigan Legislature has been unfolding with the state’s largest municipal utility since October — and with a mixed reception.

The Lansing Board of Water and Light unveiled a 20-year roadmap for its energy future Tuesday that responds to the loss of roughly 80 percent of the utility’s current generation by 2030 due to planned coal-plant closures.

Known as an Integrated Resource Plan, which was developed by a nine-member citizens advisory panel, it has recommended a 40 percent clean energy portfolio by 2030 made up of more wind, solar and energy efficiency. The plan also calls for two new natural gas plants by 2030.

Simultaneously, Michigan lawmakers are considering adopting a similar planning process for utilities statewide in lieu of renewable energy and efficiency standards that leveled off at the end of 2015. 

“I believe we’ll be the first IRP in the state once it gets adopted by the board,” said Steve Transeth, co-chair of the advisory committee and former member on the Michigan Public Service Commission.

Supporters of the IRP process say it would thoroughly vet utility generation plans rather than mandate certain resources. Clean-energy advocates have warned it will lead to an over-reliance on natural gas to make up for capacity losses.

Transeth, who is also helping draft the Senate’s new state law that would require IRPs to be filed by regulated utilities, told lawmakers last week the Board of Water and Light offers a glimpse into what that process might look like.

“The city of Lansing may be a little ahead of the curve with this,” Transeth said, driven largely by the possibility that nearly 500 megawatts of its 625 megawatts of installed capacity would be retired. “Here’s a snapshot of exactly what we’re asking (at the state level), the process and what it looks like when it’s done. You don’t usually have a case study you can look at.”

Based on public input and a variety of potential resource mixes modeled, the advisory committee recommended a plan that builds an 85 MW wind project in 2018 and 140 MW of solar between 2020 and 2030. That will be combined with 1 percent of load reduction through energy efficiency investments a year, 250 MW of combustion-gas turbine generation between 2020 and 2030 and a 150 MW combined-cycle turbine in 2030.

The recommendation results in a 40 percent clean energy portfolio by 2030.

Board of Water and Light General Manager Dick Peffley said in a statement Tuesday: “I view the (advisory panel’s) recommendations as the balanced approach necessary to maximize the BWL’s environmental stewardship while assuring a reliable and affordable energy portfolio for our customers well into the future.”

‘Incredibly opaque’

But while the Lansing utility may be the first to embark on an IRP at its scale, some clean energy advocates say the process has lacked transparency on what the possible options were based on.

“It’s very concerning if this is considered a model for any other type of utility transition planning across the state,” said Regina Strong, director of Sierra Club’s Beyond Coal Michigan campaign. “In no way do I consider this a model process for the rest of the state.”

Particularly, the group has not had access to the utility’s modeling and data, said Laurie Williams, a Sierra Club staff attorney based in Colorado.

“We found the process was incredibly opaque despite repeated assurances they would make the underlying modeling and assumptions publicly available,” Williams said, adding that the group has been trying for at least three months to get it. “We discovered serious problems with the IRP process that may have led to misleading results and could potentially put them on a path of incurring millions of dollars in unneeded capital investments.”

Based on what the Sierra Club has seen, Williams said the Lansing utility may be overestimating its capacity needs for natural gas and it didn’t account for enough rooftop solar and all available demand response resources. Additionally, the committee’s work didn’t include a price on carbon, she said.

“We think that’s a mistake given the regulatory environment they’re operating in,” Williams said.

Ultimately, Williams said her group is concerned that the report was largely based on data from Board of Water and Light staff and was not independent of what the utility wants. The Sierra Club is “generally in support” of any buildout of renewables, she said.

Transeth said he hasn’t had “any discussion” with the Sierra Club about releasing the modeling data. He added that the advisory group relied on work done by utility staff because it didn’t have the resources to pay for the modeling itself.

He disputes claims that the plan relies too much on natural gas.

“We can’t replace 400-500 megawatts of electricity with renewables,” he said. “We have to have reliability that you can only get with dispatchable energy such as these larger (gas) plants. I know the Sierra Club doesn’t agree, but we believe we have a very balanced plan that takes into consideration reliability and affordability.”

The Board of Water and Light announced plans last year for a 20 MW solar array in a nearby township. In 2013 the utility brought online a 100 MW cogeneration natural gas plant after wrangling for years with local environmental groups over the utility’s original plans that called for burning more coal.

A replacement for clean energy standards?

Republican lawmakers have endorsed for the past year an IRP process and clean energy “goals” rather than expanding the state’s renewable and efficiency standards adopted in 2008.

Formal IRPs are required in 28 states and come in various forms, usually required every few years to look out as far as 20 years.

While the bills are yet to see a full vote in either chamber of the Legislature, the idea is that all regulated utilities would need to do detailed forecasting of energy mixes for several years to come. Stakeholders would be able to intervene during the process and state regulators would vote up or down on the plans with opportunities for revisions.

Transeth says the process would be “a lot more complicated” for major investor-owned utilities like DTE Energy and Consumers Energy. The planning could last up to two years and utilities will likely be required to put out competitive bids for capital projects, he said.

Still, advocates have been skeptical about relying solely on an IRP to drive clean energy, and say the process is not an effective substitute for standards.

“Standards really provide a tremendous amount of certainty of both utilities and the state to ensure these resources are brought online to a significant degree,” Sam Gomberg, of the Union of Concerned Scientists, told Midwest Energy News last year as proposals were unveiled in the Michigan Legislature. “The evidence is so clear that not only is it cost effective, but they also bring a lot of benefits to the ratepayer. An IRP can be a great complement to those standards.”

Since then, though, Republicans have not backed down on their plans to move toward an IRP.

For utilities that will likely have to follow a similar long-term planning process, Transeth offered: “You really have to do your homework and due diligence upfront and make sure you have good data.

“We also wanted to know early on” what customers want, he added. “A lot of times we sit in Lansing and make policy decisions that may or may not be in compliance with what citizens want.”

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