I had the opportunity last week to sit down with Tremaine Phillips of the Michigan Environmental Council to talk about power and energy in Michigan. He explained more extensively the present situation and future of energy that MEC sees for the state. But first, a question on the minds of many consumers: if it works, why fix it?
Well, it doesn't really work, or at least not efficiently. There are a number of problems with the way power is currently produced and sold here in Michigan and nationally. Though the pollution generated by coal-fired generators may be the most obvious, it's not the only problem. Here are three more to think about.
New Plants=Profits.
Many coal plant projects across the state, including the Lansing Board of Water and Light's recent proposal, are losing steam due to dropping electricity demand, lack of financing, incoming carbon dioxide regulations and public pressure (such as the Lansing Can Do Better Campaign). Phillips, however, believes that Michigan utilities will continue to push for the construction of large baseload coal generation in the future. Utility companies make money when they build new plants, as they can request increased consumer rates in order to recover the costs of new projects. It would seem that increasing rates, and thus profits, would be quite an incentive to company executives to build a new plant.
Power sales need decoupling.
That's not the only way that the profit structure is faulty. Now, says, Phillips when a company like DTE encounters less demand-- say, from the combination of the foreclosure crisis and a cooler-than-usual summer, and a declining stock market-- the utility companies then may ask for a rate increase from the Michigan Public Service Commission to recover lost revenue. In other words, when less power is bought, the price of power goes up. "Decoupling" price, and more importantly, utility companies' profits, from amount of power used, would encourage them to be what Phillips called "Energy Service Companies." They would potentially then have more interest in energy efficiency and conservation.
Current Forecasts for MI Energy Future May Be Inaccurate
Whichever way you look at Michigan's population figures, it seems that the state is losing people-- both in pure numbers and in the percentage of United States citizens that live here. But when it comes to power demands, individual households are only part of energy demand. Large companies like General Motors make up a large portion of, for example, Lansing's power demand. (In 1992, GM represented about 25% of the BWL’s annual sales. Today, GM represents about 12%). As you may have noticed, GM is cutting back production these days.
The reports currently being used to predict energy usage in the next few years were published in 2007. The document being used most frequently by Michigan utility companies to predict future demand is called the 21st Century Energy Plan.
Phillips writes:
The Energy Plan’s assumption of 1.2% annual load growth in Michigan looks increasingly out of date (many utilities across the country are seeing a decrease in demand) and many energy experts see a need to update the 21 Century Energy Plan and other energy forecast reports.
What does all this mean? Well, for a start, it wouldn't hurt to learn more about the way decisions are made by the state's biggest energy suppliers. It wouldn't hurt to consider the questions asked by, then answered by, BWL on their webpage, about the proposed new plant. Are there more questions that need asking? What about the jobs argument--that a new plant will bring construction jobs and support the economy? I'd like to hear from readers on this one.
Coming in the next post on this topic: Just how big is demand for power here, and what might both demand and production look like in the future? What's next?

Recent Comments