IICC Speaks Before The Public Service Commission

Before the Michigan Public Service Commission
Public Comment of Kevon Martis, CMS Energy Customer- Director of Interstate Informed Citizen’s Coalition, Inc.
101 E. Adrian Street, Blissfield, MI 49228

Re: Case No. U-17321 – In the matter of the application of Consumers Energy Company
for authority to reconcile its 2012 renewable energy plan costs associated with the
plan approved in Case No. U-15805, Case No. U-16543, and U-16581

My name is Kevon Martis, 11917 Wegner Rd., Riga, MI. I am a CMS Energy customer. I am also the director of the Interstate Informed Citizen’s Coalition, Inc. of Blissfield, MI (IICC), a statewide bipartisan renewable energy citizen’s advocacy group. While I am giving comment today as a ratepayer and CMS customer, I wish the record to reflect the fact that in my volunteer role as director of IICC, I also speak on behalf of hundreds of residents across the State of Michigan, many who are living on the front lines of industrial wind development that is a direct result of PA295.

In this matter here before the Commission today, CMS Energy has requested a transfer price for renewable energy of $72.90.

I wish to present the following objections.

1. PA295 requires that qualifying renewable energy for the Act’s 10% mandate must be generated inside the State of Michigan. Judge Richard Posner of the Seventh Circuit Court of Appeals recently opined “Michigan cannot, without violating the commerce clause of Article I of the Constitution, discriminate against out-of-state renewable energy.”  As my colleague will elaborate further on this point,  I will not belabor it.
2. The majority of renewable energy generation being constructed as reflected in CMS’ transfer cost calculation has been industrial scale wind energy. (See Exhibit A-1, Case U-17321) Inside MISO, Michigan is a high cost wind energy producer due to a regionally anemic wind resource.   The proposed transfer cost of $72.90 reflects this cost disadvantage. Further evidence of  this cost disadvantage is the Power Purchase Agreement “Wildcat Wind I” which is the lowest recorded in MI at $45.24/MWh with a 2.25% annual increase . It is generated in Indiana’s 7-7.5m/s wind belt, a scarce resource in MI but abundant in the Prairie States.  This low price is also consistent with NREL’s 2012 Wind Technologies report which states “…PPA prices are generally low in the U.S. Interior, high in the West, and in the middle in the Great Lakes and Northeast regions. The large Interior region, where much of U.S. wind project development occurs, saw average levelized PPA prices of just over $30/MWh in 2011 and 2012.”  A $35.00/MWh wind PPA would be a cost savings of more than 50% relative to CMS’ $72.90 proposed transfer cost.
3. Michigan’s typical installed costs for utility scale wind of $2,200-2,550/kw  are far above IA’s latest installed costs of $1,650/kw, to cite just the latest example of MidAmerican’s Wind VII project approved last month by the Iowa Utilities Board.
4. CMS Energy appears to be the State’s highest cost generator of wind energy.  Their latest proposed development, Cross Winds, is expected to have a levelized cost of $62.00/MWh with the federal PTC in place.  Compared to DTE’s Pheasant Run II in the same wind zone and using similar turbine technology, CMS’ cost is 26% higher than the $49.00/MWh PPA executed between NextEra and DTE. A quick review of CMS’ history of wind PPAs show a similar systemic disparity between CMS and DTE wind pricing.
5. Since wind energy is intermittent and non-dispatchable, it cannot replace CMS’ dispatchable generating plants’ capital and fixed O&M costs. To guarantee a stable balance between supply and demand, Michigan utilities must maintain adequate dispatchable generation at all times. Since wind energy fails the dispatchability test ,  intermittent renewables can only replace the fuel costs associated with thermal generation-gas or coal fuel. CMS concedes as much when they contend in their request for MPSC  approval of their proposed Thetford Gas plant:  “The Project will also provide a fast-acting power, voltage, and regulation resource that can be used to stabilize Michigan’s electric grid in an area close to the development of many intermittent wind farms.”   Michigan’s wind mandate did not obviate the need for new firm capacity. And at the current cost of fuel, CMS’s proposed $72.90/MWh of renewable energy transfer costs can only save $25-35/MWh of coal or gas but none of the capital or fixed O&M costs of the requisite fossil generators. This is a substantial economic loss to ratepayers whom MPSC is sworn to protect.
6. PA295-the statute obligating CMS Energy to present this REP reconciliation plan today- states:

“The purpose of this act is to promote the development of clean energy, renewable energy, and energy optimization through the implementation of a clean, renewable, and energy efficient standard that will cost-effectively …[among other things]… … [p]rovide improved air quality and other benefits to energy consumers and citizens of this state.”

Despite the stated purpose of the law, there is no requirement for CMS to demonstrate empirically that there has been any significant emissions avoidance directly attributable to their REP.  They are neither obligated to measure nor assign a value to emissions avoided within the State as a direct result of complying with PA295. Thus, neither policy makers, regulatory bodies nor ratepayers have any means of measuring the cost or benefit of any “air quality” improvements resulting from PA295’s de facto wind energy mandate.
Neither does the Act require CMS to present comparative cost analysis of other known means of avoiding GHG, Hg and PM2.5 emissions. If so compelled, all evidence suggests that replacing existing coal generation with Combined Cycle Gas Turbines at $5.00 natural gas pricing  yields roughly 10 times  the GHG emissions avoided  per ratepayer dollar spent versus the existing mandate to add renewable energy to Michigan’s existing generation portfolio. Thus PA295 is in internal conflict at ratepayers expense. It implicitly assumes what is empirically false : that the cheapest path to reducing coal emissions is by adding renewable energy to our existing generation and yet demands no supporting evidence or cost benefit analysis.

7. Finally, the transfer payment approval here today is based upon another false assumption implicit in PA295- that our utilities can avoid constructing new fossil generation via a combination of energy optimization and new renewable energy generation-in practice, utility scale wind. Thus the act requires an annual cost comparison between “new coal” and wind energy as if the utilities and ratepayers have an either/or choice: new coal or new wind.  Yet on the matter of such comparisons  the Energy Information Administration is succinct: “The duty cycle for intermittent renewable resources, wind and solar, is not operator controlled, but dependent on the weather or solar cycle (that is, sunrise/sunset) and so will not necessarily correspond to operator dispatched duty cycles. As a result, their levelized costs are not directly comparable to those for other technologies (even where the average annual capacity factor may be similar)…” ,

Thus, despite the declared intent of PA295 to improve air quality, Michigan ratepayers have thus been compelled to spend $2.5 billion on wind generation and new transmission to create a system with an effective annual capacity today of roughly 300MW-but with essentially no firm capacity-and thus  no ability to permanently close any existing coal generator nor yielding any empirical evidence of any statewide air quality improvement from so doing.

Yet that same sum of money invested in Combined Cycle Natural Gas Turbine plants like CMS’ Thetford project could have permanently closed perhaps 2,500MW of aging coal generation, thereby slashing emissions from fully one half of the 9 coal plants identified by Michigan Environmental Council as the State’s worst offenders with respect to GHG, Hg and PM2.5 emissions-and  by means that could be empirically verified to have direct instate benefit.

Therefore, I, both as an individual ratepayer and on behalf of the statewide supporters of the IICC hereby respectfully ask the court to grant the following relief:

1. Order  MPSC to table all proceedings upon any renewable energy matters necessitated by PA295  until the constitutionality of PA295’s present instate generation  mandate can be decided.
2. Order MPSC to reject  CMS Energy’s current request for a transfer cost of $72.90. It is far above the current instate market value of renewable energy relative to their nearest competitor- DTE Energy- and thus is a cost that should not be borne by ratepayers.
3. Order MPSC to reject any future CMS Energy power purchase agreements for wind energy that are uncompetitive with their instate competitors-or compel NextEra and DTE to disclose the nature of their contractual arrangements so that CMS customers have equal access to the latest and lowest cost means of generating wind energy.
4. Order MPSC to cease and desist from publishing the false and misleading Levelized Cost of Energy comparison between dispatchable “new coal” and non-dispatchable wind energy in the PA295 annual report.
5. Order  the regulated utilities to work with MPSC  to replace the bogus LCOE comparison with an annual report on the “Levelized Cost of Emissions Avoided” across all technologies so that policy makers and ratepayers have access to meaningful and economically valid data.

I further ask the Attorney General’s representative present here today to convey my request to the consumer protection office of the AG to intercede on the behalf of ratepayers in challenging PA295’s unconstitutional instate generation requirement.


Kevon Martis
Riga, MI
Ratepayer/CMS Energy Customer