The Michigan Public Service Commission (MPSC) on Friday rejected applications by Consumers Energy to terminate power purchase agreements (PPAs) with biomass plant operators early. Regulators said ending the contracts prematurely would pose a risk to Michigan’s resource adequacy and that the utility might be overestimating savings created from the proposed action.

Consumers had sought to amend its long-running agreement with National Energy of Lincoln in northeast Michigan, proposing early termination of a previous amendment that had extended the PPA
for the plant’s 18 MW of electricity to 2027. The latest proposed amendment would have resulted in closure of the plant on May 31, 2024.

In June 2023 Consumers applied for a similar early termination of a PPA with Cogeneration Michigan Associates Limited Partnership’s Cadillac Plant. The new exit date would also be May 31, 2024, from July 2028.

In both cases, Consumers Energy had argued the early terminations provide several benefits, such as “an
expected reduction in cost, which will be passed on to PSCR [power supply cost recovery] customers…”.

But commissioners raised concerns about these claimed potential savings since Consumers “would turn to volatile electricity markets to replace some of the energy output and capacity lost with the shutdown of the plants.”

“The Commission found relying on unpredictable markets for replacement supply outside of a comprehensive Integrated Resource Planning process in this manner entailed an unacceptable level of risk,” MPSC said in a statement.

Consumers had proposed replacing the capacity from the Lincoln biomass plant with a 33.6 MW solar facility and the Cadillac Plant with a 67 MW solar facility. However, the utility had itself noted in testimony that given their non-dispatchable profiles, the two solar facilities would not be able to replace all the electric capacity from the biomass plants without supplemental electricity purchases.

Commissioners said that was concerning given the Midwest Independent System Operator (MISO) has warned of tightening supplies.

Regulators greenlight solar and storage projects

The Commission also approved several renewable energy and storage projects called for in the long-range integrated resource plans of two Michigan electric utilities.

Commissioners approved DTE Energy’s application to construct a 220 MW/800 MWh lithium-ion battery storage facility at the site of the former Trenton Channel coal-fired plant in Wayne County. The battery storage project is expected to cost $460 million.

The application to build the battery facility was approved the same day DTE demolished two smokestacks at Trenton Channel.

Retired in 2022, the plant was originally built to address the needs of an expanding economy post World War I and was the fourth major power plant Detroit Edison put into operation during the 1920’s. The coal-fired plant began operating in 1924.

The plant had six turbine generators with 13 coal-fired boilers. The sixth and last turbine generator arrived by 1929. At that time, Trenton Channel was the largest project Detroit Edison had undertaken. At one point, with the expansion of the plant in 1950, the facility generated 1,060 MW of energy.

At its retirement, Trenton Channel generated 535 MW.

Beyond the actions related to the Trenton Channel site, MPSC on Friday approved Consumers Energy’s application for approval of a PPA between the utility and Freshwater Solar Project, a 300 MW solar facility in Montcalm County, with a total lifetime cost of $715.7 million.

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