Dana Nessel, Consumers Energy Reach Settlement to End Use of Coal in Michigan

Attorney General Dana Nessel and Consumers Energy have reached a settlement agreement that will see Consumers ending its use of coal in Michigan in 2025.

The proposed settlement is still subject to final approval by the Michigan Public Service Commission (MPSC). Once approved, Consumers will end its use of coal 15 years earlier than originally planned.

According to Consumers, it will be one of the first utilities in the country to end its use of coal.

In addition, the settlement provides for the building of nearly 8,000 additional megawatts of solar energy by 2040. Consumers plans to generate 90% of its electricity using clean energy resources by 2040.

“Not only is this settlement a win for our environment, it’s also a win for Michigan ratepayers who have struggled to stay current on their bills,” Nessel said. “This agreement was truly a collaborative effort from all involved parties and a symbol of what we can achieve when stakeholders work together to create positive change.”

The settlement agreement also provides the following:

  1. Establishment of a regulatory asset for the undepreciated book balance of the retiring coal plants which will earn a return equal to the Company’s WACC with a 9.0% ROE and that amortizes the reg asset over a period of time consistent with their original design life of those units. And recovery of associated decommissioning and ash disposal costs less salvage value will be included in a regulatory asset which the Company may request to recover in future base rate proceedings subject to a reasonableness and prudency review.
  2. Approval of the Acquisition of the New Covert Generating (natural gas) Facility (but avoids the acquisition of additional gas plant proposed by the Company in its application) and approval of Demand Response and Conservation Voltage Reduction capital costs for recovery in rates in future Company rate cases.
  3. Retirement of Karn Units 3 and 4 which are gas peaking plants on or before May 31, 2031, unless the regional system operator or other emergent issues within the Company’s generation portfolio requires prolonged operation to maintain sufficient supply (i.e., system or company reliability require continued operation).
  4. The Company will conduct a one-time competitive solicitation to provide the Company with capacity credit in MISO Zone 7 starting in the 2025 planning year (including acquisition of 700 Zonal Resource Credits).
  5. Maintaining an FCM which is generally the same as the currently approved FCM for Consumers Energy.
  6. The Company agrees to the extension of the annual competitive bidding process to acquire supply-side resources and it will use commercially reasonable efforts to maintain a 50/50 split between new capacity from Company-Owned projects and new capacity from PPAs.
  7. Approval of the proposed battery deployment program.
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