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Putting Together the Capacity Puzzle: Natural Gas

If you’ve kept up with our recent posts here and here, you’re familiar with the looming capacity crisis that Michigan will face this year as nine of our state’s coal-fired power plants shut down due to age and environmental regulations.

Looking ahead to 2020, that number climbs to 25 generating units in Michigan alone, with hundreds more plant closures across the Midwest.  The loss of up to 16 gigawatts of baseload capacity this year has local energy providers working as quickly as possible to find ways to make up for the shortfall.

Though it’s certainly not the only solution needed, expanding and improving natural gas access in our state is one of the solutions that will help us address this capacity shortfall head-on.

One piece of legislation currently under consideration in Lansing—House Bill 4303, sponsored by Representatives Nesbitt and Roberts—seeks to do just that.  Under the “Next Mile” expansion of natural gas pipelines called for in their bill, natural gas service would expand to some 850,000 additional Michiganders (that’s 1 in 5 households).

Why Natural Gas—and Why Now?

Here’s why natural gas is poised to be such a big player in Michigan’s energy future as coal-fired power plants across the state close in the coming months and years:

  • Natural gas is already a critical part of our state’s energy mix. Natural gas is a resource that is already in widespread use. The technology is there to make using natural gas more efficient and reliable—it’s just up to Michigan to leverage this natural resource to the fullest extent possible.
  • Michigan’s natural gas capacity storage is huge. As we’ve discussed before, Michigan has the largest natural gas capacity storage in the nation at 1.1 trillion cubic feet.
  • Natural gas would provide cost savings. Expanding natural gas in our state would help Michigan families and businesses save thousands of dollars per year while facilitating a smooth transition to more reliable, less expensive, cleaner energy. Under the Next Mile legislation mentioned above, consumers could save up to $260 million per year. Rural consumers switching from propane could save as much as $1,600 on their energy bills each year.

What Needs to Happen First

Before we can really start using natural gas to offset our capacity shortfall in the coming years, we need to update, improve, and expand Michigan’s natural gas infrastructure. As Governor Snyder pointed out in his State of the State Address, Michigan has challenges when it comes to infrastructure needs in general.

  • The American Society of Civil Engineers has given our state’s infrastructure a grade of D—lower than the national average.
  • As the Governor mentioned, the MPSC began replacing natural gas pipelines when costs were low in 2011, but we still have a ways to go to complete these upgrades and ensure that natural gas can continue to be a clean, efficient, and safe solution for Michigan’s energy future.

Passing the Next Mile legislation is an important step in expanding natural gas in our state. Most of the unserved or underserved consumers that would benefit from natural gas expansion live in rural areas, including much of the Upper Peninsula. Building infrastructure to connect these areas to natural gas service would offer consumers a cleaner, more affordable alternative to the propane that many of them currently use, as well as connecting them to more reliable electricity. 

Next Mile legislation would also help:

  • Support development and growth in rural areas like Traverse City, which put its low-income housing project on hold because energy costs for existing propane or an expansion of natural gas pipelines would make rents too high.
  • Alleviate the financial burdens borne by Michigan’s agricultural industry. As much as 30 percent of farm production expenses are due to energy costs. Bringing those expenses down through connection to natural gas benefits the entire agricultural economy.
  • Spread the costs of expanding natural gas in Michigan among more consumers, making it more economical for everyone. Creating a broader infrastructure for natural gas means a larger market and potentially lower energy prices for Michiganders.

Lansing Must Plan Now

In order to make this “pipe dream” a reality, legislators in Lansing must create a road map for local energy providers and the state to implement the infrastructure plans.  House Bill 4303 is just one of several pieces of energy legislation—including the bills from Representative Nesbitt and Senators Nofs and Proos to craft new energy policy for our state—that await further hearings in the legislature.

Natural gas will play an important role in Michigan’s energy future one way or another.  Improving and expanding our natural gas infrastructure in smart ways is key to ensuring we are able to make that future as bright as possible for all Michiganders.

What would you like to know about the role of natural gas in Michigan’s energy future? Send us your questions!