Michigan regulators on Friday denied Wolverine Power Supply Cooperative’s air quality permit for a new 600-MW power plant, fueled primarily by petroleum coke and coal, in Rogers City. The state’s Department of Natural Resources and Environment (DNRE) decision was based on findings of the Michigan Public Service Commission (MPSC), which said the company failed to demonstrate the plant was needed to meet future supply.

According to a denial letter (PDF) issued by the DNRE, Wolverine had not adequately demonstrated through the alternative analysis the inability to secure long-term power supply purchase arrangements, such as buying power from an existing power plant, to meet their member needs. 

Wolverine Power is a wholesale provider of energy to four electric cooperatives that include Cherryland Electric Cooperative, Great Lakes Energy, HomeWorks Tri-County Electric Cooperative, and Presque Isle Electric & Gas Co-op.

The MPSC analysis alleged that a number of alternative methods would allow Wolverine to adequately supply its customers at a fraction of the cost of constructing a new coal-fired power plant. MPSC staff also determined (PDF) that building the proposed plant would increase electricity rates paid by average residential customers to 20.7 cents/kwh. The 59.2% rate increase could cost the average residential customer $76.95 more each month.

A statement issued by Michigan Governor Jennifer Granholm’s office on Friday noted that only Hawaii has a higher average kilowatt-hour rate. "We are protecting hundreds of thousands of Michigan homeowners, businesses, and farmers from paying a whopping increase in their electric bills, which would have been among the highest in the nation," Granholm said.

"The cost of doing business in Michigan would have skyrocketed, and despite the short-term gain from its construction, this project would have been a job-killer and a roadblock in our efforts to bring new economic development investments to Michigan."
Granholm said that in addition to protecting ratepayers from being “gouged with higher electric bills,” the decision protects Michigan’s environment from the pollution an unnecessary plant fueled primarily by petroleum coke and coal would produce.
Granholm  earlier last year had asked that the state environmental agency evaluate, along with the MPSC, “feasible and prudent alternatives” before giving coal-fired power plants in Michigan the green light. In September 2009, the Michigan PSC released a report suggesting that the state would not need a new coal plant until at least 2022, owing to energy efficiency initiatives and increased use of renewable energy sources.

In December 2009, the MDNRE approved an air permit for a Consumers Energy coal-fired power plant to be built at the company’s Karn-Weadock complex near Bay City—even though the MPSC’s report had specifically recommended that Consumers Energy delay the planned coal-fired plant near Bay City until 2022.

Earlier this year, however, in filings with the Security and Exchange Commission, Consumers Energy acknowledged substantial uncertainty over how expected environmental regulations would affect the company. In a conference call with investors, the company acknowledged serious legal and regulatory obstacles to the development of its proposed new 830-MW plant.

Source: MPSC, Gov. Granholm’s office, Wolverine Power, POWERnews