Consumers Energy, Michigan’s largest utility, announced Wednesday that it will shutter its five remaining coal plants by 2025 — 15 years earlier than previously planned — while tripling its renewable capacity and increasing use of natural gas.

Consumers, a unit of CMS Energy (NYSE:CMS), said it will cut carbon emissions 60% by 2025 from a 2005 baseline.

Environmentalists praised the early coal retirements and renewable pledges but said they would challenge the proposed gas additions in proceedings before the Michigan Public Service Commission.

“Moving off coal by 2025 is an important move by Consumers Energy … but this is only a half-step if they are going to replace coal with other fossil fuels like natural gas,” said Derrell Slaughter, Michigan Clean Energy Advocate for the Natural Resources Defense Council.  

The company said it will seek PSC approval to:

• retire coal-fired Campbell units 1, 2 and 3 (1,440 MW) in 2025 — six to 15 years sooner than their scheduled design lives; 
• retire Karn units 3 and 4 (1,100 MW), which run on natural gas and fuel oil, in 2023, eight years sooner than their design lives. (Karn’s coal-fired units 1 and 2 (500 MW) are already scheduled for retirement in 2023.);
• purchase four existing natural gas-fired plants in the state totaling more than 2 GW: the 1,176-MW Covert combined cycle plant in Van Buren County; Dearborn Industrial Generation, a 770-MW natural gas and waste cogeneration plant in Wayne County; and two peaker plants: Kalamazoo River Generating Station in Kalamazoo County and Livingston Generating Station in Otsego County. 

In a filing with the Securities and Exchange Commission, the utility said it had signed a contract June 21 to purchase the Covert facility for $810 million, with closing expected by April 2025.

Consumers currently owns two natural gas-fired plants in Zeeland (527 MW) and Jackson (542 MW).

The utility pledged to construct 8 GW of solar power (up from 6 GW in its current plan) and generate 60% of its power from renewables by 2040.

“Combining that growth with advances in energy storage and customer efficiency will allow us to meet customers’ needs with 90% clean energy resources,” the company said in a statement.

Consumers spokesperson Katie Carey said the company will file its revised integrated resource plan (IRP) with the PSC next week, kicking off a nearly year-long proceeding in which it will seek approval. A presentation on the IRP lists 1.1 GW of energy efficiency, 750 MW of demand response, more than 100 MW of conservation voltage reduction and 475 MW of battery storage.

Consumers currently runs solar plants at Western Michigan University, Grand Valley State University and in Cadillac, and purchases solar power from other locations in the state.

The utility said the proposals would save ratepayers about $650 million through 2040 compared to its current plan, in part by depreciating the retired plants over their design life rather than using securitization. Reduced fuel costs also will contribute to the savings, Carey said.

Consumers retired seven coal-fired plants totaling 900 MW in 2016. Its remaining 1.8 GW burns 9 million tons of coal annually.

At a press conference, Consumers CEO Garrick Rochow said the plan would reduce carbon emissions by 63 million tons.

Company executives said purchasing the existing four gas plants was critical to the plan’s success, contending it needs the additional natural gas capacity for reliability. “A predominantly renewables scenario offers insufficient capacity to meet reliability standards in the winter when solar energy is less abundant — and in the summer,” the company said.

Purchasing existing plants with less remaining life at a lower cost “reduces long-term risks,” it added.

Reaction

“This historic and critical announcement from Consumers Energy to shutter coal plants ahead of schedule will improve the health of Michigan residents and protect our Great Lakes from pollution,” said Charlotte Jameson, program director of energy for the Michigan Environmental Council. “However, we are skeptical of the transition to using additional natural gas to fulfill our state’s energy needs. We will be intervening in the case to put forward ways for Consumers Energy to more rapidly transition to fully carbon-free, clean energy, like wind and solar, energy efficiency, and battery storage.”

John Delurey, Midwest senior regional director for Vote Solar, also criticized the company’s gas plans. “To meet Gov. Gretchen Whitmer’s goal of carbon neutrality, we need stronger investments in clean energy, including a hard look at the benefits of increased distributed generation,” he said.

“We appreciate Consumers’ commitment to move beyond coal and not to create new fracked gas infrastructure, unlike DTE, who have used every opportunity to double down on coal and fossil fuels,” said Mike Berkowitz, Michigan Beyond Coal Campaign representative for the Sierra Club.           

Nick Occhipinti, government affairs director for the Michigan League of Conservation Voters, said that, in addition to investing in renewables, Consumers “should prioritize energy waste reduction and expanding rooftop and local community solar before investing in additional natural gas plants.”

‘Just Transition’ Promised

In addition to touting the environmental impact of the new plan, company officials also said it would be good for their shareholders, noting the gas plant purchases would add $1 billion to its rate base over five years. With the addition of the gas plants and CMS Energy’s recently announced sale of EnerBank, more than 95% of CMS’s earnings will be from its regulated utility and 5% from unregulated businesses, it said.

At the press conference, Brandon Hofmeister, CMS Energy senior vice president of governmental, regulatory and public affairs, said the company will ensure a “just transition” for the 510 employees at the five coal plants as well as the communities hosting them.

“We have a great track record of success of taking care of both the coworkers at these facilities — ensuring that they have the opportunity to continue to find work at Consumers Energy — as well as working proactively with the communities to reimagine the economic development opportunities for those communities and for these sites,” he said.