Electric Utility Resource Plans Are Critical to the Midwest’s Energy Future

, lead Midwest energy analyst | January 28, 2019, 2:30 pm EDT
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Earlier this month, my colleague Joe Daniel authored a viewpoint in Utility Dive identifying electric utility resource plans as one of the six key trends to watch in 2019.

Lay of the (resource planning) land: Dark blue states are confirmed to have at least one utility with a resource plan to be filed or ruled on in 2019. Lighter blue states are expected to see at least one utility file a resource plan (including states that are part of a multi-state plan). State filing plans are subject to change. Credit: Union of Concerned Scientists

At least 30 states will see at least one electric utility with a resource plan in 2019, including states with an expected ruling on an already-filed plan.

The Union of Concerned Scientists (UCS) is a participating stakeholder in resource planning dockets in both Michigan and Minnesota and is applying our technical expertise in partnership with local coalition advocates working with affected communities.

Let’s dig into what exactly resource plans are, why they matter, and what to look for in these Midwest states as electric utilities develop and seek approval for their resource plans.

What are Integrated Resource Plans or “IRPs”?

Industry experts have described IRPs as “utility plan[s] for meeting forecasted annual peak and energy demand, plus some established reserve margin, through a combination of supply-side and demand-side resources over a specified future period.” They also provide utilities with an opportunity to evaluate existing resources and find ways to optimize the operation of those resources.

Wonky, right? Yes!

To break it down, in the resource planning process a utility first tries to determine what amount of electricity consumers in its service territory will require in the future (usually over the next 20 years).

Next, the utility looks at how much each of the different options may cost to fulfill that demand.

A chunk of it could come from investing in energy efficiency and demand response programs to reduce overall electricity usage, and especially demand at peak times such as hot summer afternoons.

The rest comes from power generating resources, such as the utility’s existing resources, building new ones, or from buying power on the grid generated by other electricity providers or customers.

Why are IRPs so important?

How utilities decide to supply energy can play a large role in determining how much customers pay on their electricity bills and no one likes paying more for something than they should.

For example, if regulators allow utilities to build or operate overly-expensive resources, customers could end up paying a lot more than they do in neighboring states. (See another great piece from my colleague Joe Daniel, The Coal Bailout Nobody is Talking About.)

On the flip side, if utilities properly value things like renewable power and energy efficiency, they may find ways to close inefficient fossil fuel resources like coal plants and invest in solar and energy storage instead of building risky new gas plants. This can save consumers money and also reduce carbon emissions from the power grid, something that science says is urgently needed to combat climate change.

For all these reasons, UCS and others are urging that utilities in their resource plans must properly account for future carbon regulation, the risk of gas price volatility, and the declining costs of wind, solar, and energy storage resources.

Appropriately analyzing these factors should lead to only modest investment decisions in new gas and instead larger selections of clean energy resources that are increasingly cheaper and less risky.

What’s happening in Michigan and Minnesota?

In Michigan, Consumers Energy, the state’s second largest power provider, filed its resource plan in June 2018 and the docket is pending. The utility has a plan to phase out its remaining coal-fired power plants and replace them with clean energy such as solar, efficiency, and demand response. UCS filed testimony in the docket in October 2018. Expect a decision from the Michigan Public Service Commission in March.

Michigan’s largest power provider, DTE Energy, is scheduled to file its resource plan by March 29, 2019. The company has already held technical workshops and public forums to inform the development of its plan; testimony and comments on the draft IRP will follow the filing. An executive for DTE recently spoke at length on the company’s consideration of renewable energy, energy efficiency, and demand response to replace existing coal plants.

As for Minnesota, Xcel Energy has held numerous stakeholder workshops in late 2018 and continuing into 2019 as part of developing its resource plan. In December the utility made a big announcement establishing a goal of 100 percent carbon-free energy by 2050. Xcel’s plan will be filed with Minnesota regulators in July 2019.

I will be posting regular blog updates on these IRPs so continue to follow this blog for more information on this important 2019 utility trend.

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