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EPA Regulations & Michigan’s Energy Infrastructure

Last year, the U.S. Environmental Protection Agency (EPA) released its sweeping new ” Clean Power Plan,” (see our previous reports, in June and August), which would require power companies to reduce their carbon emissions by 30 percent nationwide by 2030. States like Michigan must come up with the plans to meet these goals and submit them to the EPA by June 2016.

As noted previously, AMP believes the EPA’s principles are positive (and in fact are similar to our own innovation and sustainability guidelines). But the scope and timetable of the goals involved are extremely aggressive, and we have concerns about the impact on affordability, reliability, and the economy as Michigan energy producers scramble to meet the EPA’s ambitious requirements. 

We are also gravely concerned about the impact this will have on Michigan’s aging energy infrastructure, particularly our fleet of coal-fired plants, which will be rendered all-but-obsolete by the EPA’s plan.

Michigan Energy Provider’s Response

As we noted in June, to meet the EPA’s goals, Michigan energy providers will need to invest billions of dollars in infrastructure development while at the same time moving aggressively to diversify Michigan’s energy portfolio.

In reaction to the EPA’s new rules, Michigan energy providers have responded in full force, with plans to invest a whopping $15 billion dollars to upgrade our state’s energy infrastructure, including upgrading and replacing old power plants. Once complete, this will be the biggest investment energy companies have made in Michigan in many decades, wholly transforming our energy approach and outlook as a state.

Michigan energy producers are already putting their plans into action, focusing on natural gas and wind power generation as the best options to meet the EPA’s standards with the smallest impact on consumers and businesses.

Looking Ahead

While we are largely supportive of the EPA’s goals—and we are excited to see so much investment in Michigan-based energy and our state’s power-based infrastructure on the horizon —concerns remain.

• The pace and sheer size of the changes envisioned by the EPA are truly ambitious.

• Price hikes are inevitable as local providers work to maintain accessibility to power while transforming their energy portfolio very, very quickly by industrial standards.

• There will also be costs involved with shuttering existing power plants.

In the long run, we believe that these investments will result in innovative, Michigan-based energy solutions and capital investments in new technologies that will set our state up for a bright energy future. But getting there may be painful for everyone—energy producers, consumers, and businesses alike.

AMP believes our state legislators need to focus on ways to make the transition as smooth as possible and mitigate detrimental impacts for all Michiganders. That’s a tough proposition, no question. But we also believe that, working together, we can find smart solutions to the challenges ahead.  We’ll keep you posted as the 2015 legislature’s work on energy takes shape in the coming weeks and months.