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Mich. agency concerned about local supply shortage despite import capability

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Mich. agency concerned about local supply shortage despite import capability

The Michigan Public Service Commission is concerned about having enough in-state power supply over the next five years even though it can import from neighboring regions.

"In the near term, the regional supply outlook is critical, since part of Michigan's needs will have to be met by importing power from out-of-state producers," the commission said on July 31. "Supplies at the regional level have increased since last year, but it is highly likely that Michigan will need additional capacity resources within the state, due to additional expected retirements, to meet local capacity requirements in the coming years."

In a June 27 memo, the PSC staff found the Midcontinent ISO's Zone 7, a region of the central grid that covers most of the Lower Peninsula of Michigan, might be short of local supply after 2018 based on analysis of utility assessment reports. A total of 23 utilities and cooperatives filed self-assessments of their forecast power demand and available supply over the next five years. Zone 7 showed "significant" changes in its supply from the potential shutdown of Entergy Corp.'s 819-MW Palisades nuclear plant in 2018. Local utilities DTE Electric Co. and Consumers Energy Co. have also committed to shut numerous coal plants in the state. For instance, DTE, a subsidiary of DTE Energy Co., expects to shut units at three coal plants between 2020 and 2023. Consumers Energy, a subsidiary of CMS Energy Corp., shut seven coal plants in 2016.

Another impact to local supply comes from a fire at DTE's St. Clair plant in 2016, which shaved about 300 MW from the forecasted capacity at the plant compared to 2017 levels, PSC staff said in the memo.

Local supply is important to address potential shortfalls of capacity from coal retirements and if there are import constraints, the PSC said in its release. Under the PSC's analysis, Zone 7 does not have enough local resources to meet MISO reliability requirements and would need to import. For instance, in the 2018/2019 planning year, which runs from June 1, 2018, to May 31, 2019, the zone would need to import 991 MW from out-of-state resources, according to the memo. That amount is well below the zone's import limit, which prevents it from taking in more than 3,320 MW. However, if the zone were to "experience a capacity shortfall that approached the magnitude of its [capacity import limit], it would cause concern amongst the stakeholders with responsibilities regarding resource adequacy," PSC staff said in its memo.

The findings of the memo also align with a 2017 survey that MISO conducted with the Organization of MISO States, a group of state utility regulators. The survey found that Zone 7 could be up to 1,500 MW short in 2022 of meeting local resource needs, but that regional surpluses across MISO's 15-state grid could help fill in the gap, according to a MISO presentation.

Unlike MISO, the PSC staff "posits that demand response will likely undergo expansion and present a resource for reducing peak capacity needs," according to a July 31 order from the commission. The position reiterates a finding from the PSC's Jan. 31 paper, "Michigan Capacity Resource Assessment," which reported that demand response is a cost-effective option that could help fill in the power supply gap in the Lower Peninsula. Demand response resources are essentially users who can curb their electricity consumption at times of peak demand.

MISO Zone 2, covering the Upper Peninsula of Michigan and portions of Wisconsin, will have a surplus of about 6,000 MW in the 2018/2019 planning year, the PSC said, and American Electric Power Co. Inc. subsidiary Indiana Michigan Power Co., which serves southwestern Michigan, is supplied through the PJM Interconnection market, where it will have "plenty of power." (Michigan PSC Case U-18197)