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Michigan’s Looming Capacity Crisis

In a recent post, we talked about how deregulation was exacerbating certain capacity issues in Michigan, and how these issues could get worse down the line as federal emissions restrictions kick in and a number of coal-fired generation plants are shuttered.

Today, we’d like to take a broad view of Michigan’s capacity issue, and examine how it could impact Michigan’s energy future.

Capacity—An Overview

Unlike the past several years where Michigan has enjoyed the security of an energy surplus, 2016 will mark the beginning of an electricity shortfall.  Here’s a quick look at why this is happening:

• A significant number of power plants—providing electricity to more than one million Michiganders—will close next year because they do not conform to federal regulations.

• Overall, nine plants here in Michigan, and more than 60 in the Midwest as a whole, will be shut down in 2016. These plants are decades old, and it is simply not practical or affordable to update them.  The loss of these plants will greatly impact the supply of electricity in both our state and region. The Lower Peninsula alone will see a reduction in capacity of 3 gigawatts—enough electricity to power more than two million homes.

• Even while our electric capacity shrinks, the demand for energy in Michigan continues to grow, and so do the costs of even basic infrastructure maintenance.

• The 10 percent of our market that is currently deregulated draws financial resources out of state. Instead of being able to invest those revenues in upgrading and expanding Michigan’s energy infrastructure, they end up primarily in the pockets of energy marketers that don’t contribute to maintaining our infrastructure or expanding Michigan’s energy capacity.

Reliable estimates as to what it will cost to update Michigan’s energy infrastructure and restore our capacity run upwards of $15 billion.

Lansing Must Provide Solutions

It’s up to the legislature to fix this problem in 2015. What is needed is a flexible, comprehensive, and forward-looking energy policy plan that:

• Focuses on Michigan energy produced by Michiganders for Michiganders.

• Helps grow the economy and create jobs.

• Makes sure prices remain both affordable and stable for Michigan families and businesses.

• Comprises a flexible mix of energy sources that includes renewables like wind and natural gas, and also enables us to make use of cleaner traditional energy sources, as well as leverages efficiency efforts to make our electricity supply go farther.

Electricity is both an essential service and an economic driver. It is vital that Lansing’s policy decisions in 2015 balance all the important priorities our state faces in a way that puts Michigan first and gives us control over our own energy future.