The Building Tradesman Newspaper

Friday, June 11, 2010

Double whammy…Consumers suspends plans to build $1.2 billion powerhouse

By Marty Mulcahy, Editor

BAY CITY – Consumers Energy announced May 27 that it has shut down plans for the development of a new 830-megawatt clean coal power plant that it planned to have in operation in 2017.

The Michigan utility stressed that it is deferring – not canceling – development of the new plant because of reduced customer demand for electricity due to the recession, forecasted lower natural gas prices due to recent developments in shale gas recovery technology, and projected surplus generating capacity in the Midwest market.

“We continue to believe that new clean coal generating capacity will be in the long-term best interests of our 1.8 million electric customers as part of a balanced energy portfolio, but the current timetable for the new unit isn’t consistent with today’s market conditions,” said John Russell, the president and chief executive officer of CMS Energy and Consumers Energy. “ Based on the latest market dynamics, we have determined that it is in the best interests of our customers to defer development of the new plant at this time.”

He said the company will monitor customer demand, fuel and power prices, and other market conditions, but has set no timetable for a future decision about the project.

The proposed plant, with a $1.2 billion price tag, would have employed about 1,800 Hardhats at peak, and created more than 100 permanent jobs. The plant would have been built on the site of the Consumers Energy’s existing Karn-Weadock powerhouse in Hampton Township.

“We were shocked when we learned this news, this is just absolutely devastating,” said Michigan Building and Construction Trades Council President Patrick “Shorty” Gleason. “The need for these jobs is so great, and down the road, this would have employed so many of our people.”

Gleason said the building trades have spent years building coalitions around the state with utilities, state regulators and Republican and Democratic lawmakers to line up support and clear the way for the new Consumers plant and other Michigan-based powerhouse construction, including the Wolverine plant in Rogers City. Those efforts culminated in September 2008 with the bipartisan repeal of eight-year-old Public Act 141, which essentially deregulated Michigan’s utility market.

“That’s the other part of this,” Gleason said. “A lot of lawmakers laid down on the tracks for us, and there’s nothing to show for it when they go before the voters.”

Seeking to transform Michigan into a hub of alternative energy manufacturing and production, the administration of Gov. Jennifer Granholm has, over the last 16 months, actively staved off permits that would allow construction of several fossil-fuel-burning plants around the state. Through the state Department of Natural Resources and Environment, and well as the Michigan Public Service Commission, state regulators have basically argued that Michigan doesn’t need the additional electrical generating capacity, and can get sufficient power in the foreseeable future from sources provided by other utilities.

Left unsaid was the tremendous pressure the Granholm Administration has received from environmental groups that have questioned the need for more coal-burning plants in Michigan, when alternative energies like wind and solar power should be considered.

Gleason said there’s a flip side to Consumers announcement. Without a new power plant, the utility said it would continue to depend on its existing fleet of power plants, which average 50 years of age. The building trades, he said, will continue to perform maintenance and pollution control upgrades on those plants – which amounts to a substantial portion of work.

In fact, Consumers’ Russell said “we have a number of alternative investment options, including additional environmental controls on some of our existing coal-fired units, that will support our efforts to provide customers with reliable and affordable energy,” adding those substantial investments are expected to create nearly the same number of jobs as the clean coal plant.

Guy Snyder of Michigan Construction gave the industry something else to think about. He wrote that Consumers Energy’s decision seems to be dictated by “the weird politics captivating today’s Lansing” pushed forward by the renewable energy movement. First he questioned the Consumers Energy statement that it remains committed to its Growing Forward strategy, which calls for investing approximately $7 billion in its electric and natural gas utility operations over the next five years.

“Hold on,” he wrote. “What is Consumers doing over the next five years that will cost $7 billion when electrical demand is going to be so weak?”

Second, he said with Michigan residents regularly protesting the placement of windmills in their backyards or off in our lakes, using the wind as a significant renewable energy source may never happen.

“This abandonment of the harsh realities of life spawns extremely risky business,” Snyder wrote. “Five to ten years from now, with the rest of the country enjoying a return to prosperity, Michigan could remain an economic backwater because we must import our electricity at very high cost.

“You’ll see it. An inability to build modern generating plants today will cripple Michigan’s economy. It will take a minimum of ten years to alleviate the problem, given the current permitting process. But that’s assuming our state suddenly wakes up to common sense and returns to baseload construction.”