The Building Tradesman Newspaper

Friday, December 16, 2011

Consumers Energy cancels construction of $2 billion coal plant

By The Building Tradesman

JACKSON – Consumers Energy announced Dec. 2 that is has canceled plans to construct a new baseload coal-burning power plant on the grounds of its existing Karn-Weadock plant near Bay City.

The plant had a price tag approaching $2 billion and was expected to employ about 1,800 construction workers. Consumers placed a hold on the project in June 2010, citing reduced customer demand for electricity due to the recession, forecasted lower natural gas prices due to developments in shale gas recovery technology, and projected surplus generating capacity in the Midwest market. Now, the hold placed on the plant’s construction is permanent.

However, Consumers still has a now-smaller fleet of existing boilers that will need service from the building trades, and the utility expressed its continued commitment to pollution control work and conversion to green energy sources like wind power. The utility said it plans to continue a $1.6 billion environmental program investment at its five major coal-fired units, as part of a $6.6 billion investment in its utility operations through 2016 “to add value to customers and improve the environment.”

John Russell, the utility’s president and chief executive officer, said the investments would boost the state’s economy as well as improve the environment.

“We expect these substantial investments will create more than 2,000 construction jobs in Michigan and provide significant emissions reductions that will continue our ongoing efforts to help make Michigan’s air the cleanest it has been in generations,” he said.

Patrick Devlin, secretary-treasurer of the Michigan Building and Construction Trades Council, said canceling the plant’s construction is not a surprise. “I don’t think anyone is surprised that it has been canceled, but it’s still disappointing,” he said. “What can you say – Consumers knows the energy marketplace, and they weren’t ready for such a big commitment to a new coal-burner. But Consumers Energy obviously has a has a number of construction projects in the pipeline, and we in the unionized trades have been great partners with them in the past, and we look to continue to be in the future.”

With the environmental program, Consumers Energy said it anticipated suspension of operations at seven of its smaller coal-fired units, which are projected to reduce the utility’s power plant emissions by 90 percent. The utility said it didn’t anticipate operating those units past Jan. 1, 2015.  However, the utility also said that market conditions and the final form and timing of federal and state environmental regulations could lead it to adjust its plans for those units.

The seven coal-fired units set for shutdown include:

  • Three at the J.R. Whiting Generating Complex near Luna Pier in Monroe County (effectively ending production at the plant, which started producing electricity in 1952).
  • Two at the B.C. Cobb Generating Plant in Muskegon. Those are the only two coal-fired units at Cobb, effectively ending power production at the plant, although the facility has three 60-megawatt natural gas-fired units, which Consumers’ website says “are in layup currently until economic conditions warrant their utilization.” A Consumers Energy spokesman said the utility “hasn’t announced any change” for the Cobb plant, other than the planned shutdown of the two coal-fired boilers.
  • Two – Units 7-8 – at the Karn-Weadock Generating Complex near Bay City. Units 1-2 will remain in operation, and the plant has two other units that burn a blend of natural gas and fuel oil.

Consumers Energy began construction last month on its first wind farm, the Lake Winds Energy Park, in Mason County. The 100-megawatt facility is scheduled to begin serving customers late in 2012. It also is developing the 150-megawatt Cross Winds Energy Park in Tuscola County.  That wind farm is scheduled to enter service late in 2015.

The environmental lobby’s bias against coal-fired power plants may or may not have played a role in Consumers Energy’s decision to shelve the new plant. But there’s little doubt that that the green lobby has had its effect on the state politics: two years ago, Michigan was primed for the construction of two new coal-burning baseload power plants.

Now the new Karn-Weadock plant is history, and a proposed $1 billion Wolverine Power Cooperative coal-burning plant in Rogers City is hardly a sure thing. Wolverine was denied a permit to construct under the Granholm Administration, but the more business-friendly Snyder Administration gave the green light for the plant earlier this year. However, Wolverine’s CEO said in late August more information would be needed and that they were only “hopeful” a new plant could be built.

In the last few years, new availability due to advancements in the collection of shale gas using the controversial “fracking” method underground in Michigan and other states has led to a huge shift in the economics of fuel for power plants. Coal isn’t the only fuel that’s relatively cheap and readily available.

“The availability of shale gas has really changed the energy market in Michigan,” said Consumers Energy Public Information Director Dan Bishop. “A lot of people are looking at it as the fuel of the future.”