I hate to use clichés but it’s so true in this case: The UP power dilemma is the product of the perfect storm. It’s a tale in which the last chapter as the good folk and businesses of Michigan’s Upper Peninsula getting saddled with cost they don’t deserve.
Chapter 1: Once upon a time, the Michigan legislature passed a law that limited how many electric customers could get their power from someone other than the incumbent utility – unless you were a UP mining company served by We Energy, which are exempt from the from the limitation because they composed more than 75% of We Energy’s Michigan retail sales. They argued successfully that the mines should have the choice option despite the limit. They took that option, which made it harder for We Energy to do business in Michigan.
Chapter II: Meanwhile, in a land far, far away, the US EPA drafted new rules on power plant emissions. We Energy first said it was selling its old 430-MW coal plant in Marquette because of these regulations, and the loss of the mines’ load, but the numbers didn’t add up so they said they would close the plant, putting a huge chunk of UP power supply in jeopardy.
Chapter III: But wait! That plant can’t close, says MISO, the agency that runs the grid. Without that old coal plant, reliability in the UP – the ability to keep the lights on – will suffer. MISO said that plant “must run.”
Chapter IV: There’s more. “OK,” said We Energy, “but it costs a lot to run that plant,” about $100 million a year, the feds said, including the cost of emission upgrades to meet new EPA air standards.
Chapter V: Meanwhile, back in that land far, far away the feds rolled out a new method for allocating “system costs” – determining how users divvy expenses for things like transmission and infrastructure. When the calculator smoke cleared, they said 99.5% of those We Energy costs must be paid by UP ratepayers, even those who weren’t We Energy customers.
The End: Not quite. This is a sticky wicket of unprecedented stickiness. Clearly these unintended consequences are neither “reasonable nor prudent” for UP electric customers.
Michigan needs a plan for the UP and it needs to capitalize on its local energy resources, like woody biomass, rather than forking over billions to power an old coal plant, or build transmission.
The state, the feds, utilities and industry in the UP need to fix this problem, and biomass should be a part of that solution.