Photo: Walter/CC BY (Flickr)

Will Michigan’s Public Service Commission Stand Strong and Reject DTE’s Billion-dollar Natural Gas Gamble?

, senior energy analyst | March 26, 2018, 9:00 am EST
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Months of technical analysis have wrapped up. Thousands of pages of documents, testimony, and legal briefs have been submitted. And the entity charged with protecting ratepayer interests—Michigan’s Public Service Commission (MPSC)—has the proof it needs to stand up for ratepayers and the environment by rejecting DTE’s proposed $1 billion natural gas gamble. But will the Commission rise to the challenge?

Wind power in Michigan

As DTE looks to transition away from coal, clean energy—including renewables, efficiency, and demand response—are proving to be cheaper and cleaner. They’re also creating more jobs and economic development than natural gas. Photo credit: Flickr user RTD Photography

As DTE, Michigan’s largest utility, laudably looks to transition away from its historic overreliance on coal-fired power plants, it has regrettably turned its eye towards natural gas, figuring it can keep building large—and expensive—power plants that look good on its balance sheets while saddling ratepayers with the costs.

This appears to be DTE’s thinking as it has come to the MPSC seeking approval to build a 1,100 megawatt (MW) natural gas power plant with a cost to ratepayers of $989 million, including about 10 percent profit for its shareholders.

To get approval, DTE must prove that the plant is the “most reasonable and prudent” option for meeting customer demand. However, DTE fell flat in its attempt to do so. In fact, a counter-analysis submitted to the MPSC clearly showed that a combination of energy efficiency, demand response to reduce peak demand, and renewable energy could replace DTE’s retiring coal plants for less money, less pollution, and more jobs.

Michigan’s energy future shouldn’t be decided by shoddy, biased analysis

I wrote back in January about DTE’s analysis and the multitude of errors, inconsistencies, and biases that were discovered by parties (including UCS) that intervened before the MPSC to review DTE’s proposal. It’s a lengthy list that, by any objective standard, undermines DTE’s purported conclusion that its proposed natural gas plant is the best option for ratepayers.

We also used DTE’s own modeling tools to show how a combination of clean energy alternatives—renewables, efficiency, and demand response—could meet DTE’s power needs at lower cost while providing a more diverse, cleaner, and lower-risk portfolio of energy resources. Then last month a study completed by BW Research Partners (commissioned by UCS and Vote Solar) showed how this portfolio of clean energy resources would create more jobs and more tax revenues than DTE’s proposed project.

Other intervenors agreed with our assessment of DTE’s analysis. Even the MPSC’s staff agreed that DTE’s analysis of the proposed plant and alternatives fell short, finding they would have “preferred a more robust analysis”, that they “had concerns with DTE’s risk analysis”, that they are “concerned with DTE’s renewable energy and distributed energy portfolio”, and that DTE’s energy efficiency program is “bare bones.”

Yet, despite all those concerns, MPSC staff still recommended that Commissioners approve DTE’s application because DTE has “minimally complied” with the law.

Is this how we’re going to make billion-dollar investment decisions that will impact ratepayers and the environment for decades to come? I hope not. DTE, and all of Michigan’s monopoly utilities, should be held to far higher standards.

DTE on clean energy: I’ll gladly pay you Tuesday for a hamburger today

Installing solar panels in PA

Actions speak louder than words. DTE’s proposal to spend the next 10 years building natural gas plants doesn’t square with its talk about addressing climate change or investing in renewable energy. Photo: used with permission from publicsource.org

You never want to be compared to Popeye’s friend Wimpy, but that’s exactly DTE’s approach to clean energy—give me what I want now and I “promise” to take care of you later. That simply isn’t good enough when it comes to clean energy and addressing climate change. DTE has made strong statements on the growing threat of climate change and pledged to cut it carbon emissions by 80 percent by 2050. It has pushed back on a looming ballot initiative that would increase the state’s renewable energy standard to 30 percent by 2030 by claiming that the company is already planning to invest heavily in renewable energy.

But here’s the rub: the plan they put before the MPSC would put them in a constant state of build. Not renewables, but natural gas. First the $1 billion plant that it wants approval to start building now to be completed in 2023. Then another $1 billion plant it wants to build starting in 2024 to be completed in 2029.

The majority of DTE’s renewable energy investments wouldn’t happen until after 2030. In fact, under DTE’s plan, only 11 percent of its energy would come from renewables by 2025. If historically low natural gas prices go up, ratepayers will bear the burden—not DTE. If we as a nation get serious about climate change and these plants must be dialed down or shuttered, that would be on ratepayers too. But DTE is asking for its hamburger today and promising it will build lots of renewables on Tuesday.

Time for the MPSC to step up and set a strong precedent

When utilities come to the MPSC asking for $1 billion in ratepayer dollars (including a guaranteed 10 percent rate of return), the MPSC must hold them to a high standard of proof that the investment is a smart one for ratepayers. DTE failed to do that and should be sent back to the drawing board to take a more serious look at all the reasonable alternatives.

Robust analysis and careful planning are at the heart of ratepayer protection. Particularly when we are in the midst of an energy system transformation, the MPSC’s role in holding utilities accountable for sound decision-making is as important as ever. Let’s hope they take that role seriously.

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  • Maria G

    It would be sensible for Michigan environmentalists to council and organize town hall meetings with invited State representatives, UCS ,Media invites and Regional citizens for question and answer sessions…

    • Thank you Maria for reading the blog and for your comment. We do our best to serve as a resource for all stakeholders, including local councils, state legislators and the media, and we work with other environmental and clean energy organizations to be on the ground and in person as much as we can given our limited capacity. That being said, we are actively communicating our position with legislators, the media and interested stakeholders wherever the opportunity arises.

      Thank you again. Have a great day.
      Sam

  • solodoctor

    Thanks for an informative summary. Are there enough UCS members in Michigan to lobby the MPSC to rule against these plans? How about a letter writing campaign ASAP?

    • Thank you for your comments. We do have more than 13,000 supporters in Michigan, and in partnership with other clean energy organizations have been working to mobilize those that are in the DTE service territory. We do have a petition that supporters can sign and a public facing web page specific to this topic if you are interested.

      Thank you. Have a great day.
      Sam