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 December 09, 2011
Consumers Energy Cancels Key Coal Project, Plans to Close 7 Smaller Units

 CMS Energy Corp.'s Consumers Energy, which has the oldest fleet of coal plants in the nation, with an average age of 50 years, on Friday said it was immediately abandoning plans to build a $2 billion, 830-MW clean coal plant project near Bay City, Mich., and was planning to suspend operations at seven smaller coal-fired units in 2015.

As part of a $1.6 billion effort to update its air quality control plans, the Michigan utility said it would also make "substantial environmental investments" at its five major coal-fired units. These upgrades, and closures of the seven smaller plants, are projected to reduce the firm's power plant pollution emissions by 90%, it said.

Consumers Energy had put its proposed Bay City plant on hold last year. On Friday, it said it was canceling the project "because of the same market factors that led it to defer development of the project in May 2010. Those primarily are reduced customer demand for electricity due to the recession and slow economic recovery, surplus generating capacity in the Midwest market, and lower natural gas prices linked to expanded shale gas supplies," it said.

The company also cited lower natural gas prices, which "make new coal-fired power plants less economically attractive," it added. The company embarked on a plan to upgrade its plants in response to "existing and pending federal and state environmental regulations and ongoing market conditions."

Consumers Energy said it does not plan to make any significant environmental investments in its seven smaller coal-fired units, which it hadn't planned on keeping open after Jan. 1, 2015. But it retained the option to reopen them at a later date, saying that "market conditions and the final form and timing of federal and state environmental regulations could lead it to adjust its plans for those units." The seven units include three at the J.R. Whiting Generating Complex near Luna Pier, two at the B.C. Cobb Generating Plant in Muskegon, and two at the Karn/Weadock Generating Complex near Bay City.

The company recently began construction on a 100-MW wind facility, which is expected to be completed later this year. It is also developing the 150-MW Cross Winds Energy Park in Tuscola County, a project slated to enter service late in 2015.

Coal generation produces nearly 60% of Michigan's power. In 2009, former Gov. Jennifer Granholm (D) asked the state environmental agency to evaluate, along with the Public Service Commission, "feasible and prudent alternatives" before giving coal-fired power plants in Michigan the green light. The Michigan Public Service Commission later 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. That report had specifically recommended that Consumers Energy delay the planned coal-fired plant near Bay City until 2022.

Facing several roadblocks in the permitting process, Consumers Energy put the Bay City project on hold in May 2010, and this July, the utility was granted an 18-month extension on its air permit for the proposed coal plant.

Sources: POWERnews, Consumers Energy