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In Michigan, utilities project flat summer peak demand

The tepid economic recovery means at least one Michigan utility is seeing slow growth in summer peak demand, according to a recent filing with state regulators.

The flat demand for power for Detroit Edison was reflected in summer assessments filed recently with the state’s Public Service Commission by Michigan electric power providers as well as Wisconsin utilities serving the Upper Peninsula of Michigan.

Detroit Edison predicted peak summer peak demand which was lower than 2008, while American Electric Power said its reserve margin — a measurement of available capacity relative to projected demand — was a flush 29 percent for its 5 state east region. Historically, reserve margin targets have been around 15 percent.

Consumers Energy is projecting peak demand of 8,415 MW with 8,646 MW of capacity and will purchase 621 MW to meet its obligations. However, Consumers’ projected peak is also lower than the 8,556 MW it predicted for summer 2008.

A spokesman for DTE Energy blamed the economy for the slow demand.

“DTE Energy’s peak electrical demand is largely dependent upon the economic conditions in southeastern Michigan,” said Scott Pifer, DTE’s manager for operational and planning engineering.

Doug Gotham, economist at Purdue’s state utility forecasting group, said “certainly the recession has cut back demand. If rates have increased, that will also cause demand to drop. Another factor could be fuel switching due to low natural gas prices”.

Wisconsin utilities that serve Michigan’s Upper Peninsula also filed with the Commission — although most of their load is in Wisconsin.

WE Energies had a 12 percent reserve margin estimate while Wisconsin Public Service predicted just over 7 percent.

While peak demand growth has slowed, the PSC predicted a 1.4 percent sales growth in its appraisal report issued in October of 2012.

The excess capacity in some parts of the Midwest is a complicating factor as environmental groups and others push for utilities to shut down aging coal plants, expand renewable energy and adopt efficiency programs.

Christopher Crane, CEO of Chicago-based Exelon Corp., has blamed the situation on the rapid expansion of wind energy, which he says is making it harder for the company’s nuclear plants to compete.

“There is a very high probability that existing safe, reliable nuclear plants will no longer be competitive and will have to be retired early,” Crane told Bloomberg News in March.

In Wisconsin, Dominion Resources is  shutting down the Kewaunee nuclear plant, citing low electricity prices and a lack of demand. The company had just secured a twenty year license renewal from the NRC but could not find a buyer for the output of the plant nor for the plant itself.

Also, a recent report by the Union of Concerned Scientists ranked Michigan 5th among states with coal-fired power plants it considers “economically uncompetitive and thus ripe for retirement.”

Grid operators MISO and PJM, and transmission companies ITC and ATC, are expected to file their comments on Michigan’s summer peak demand outlook today, while MISO will hold a summer assessment workshop on Monday. PJM will release its summer outlook on May 1.

Bill Malcolm is a freelance reporter/energy economist based in Indianapolis who has covered Midwest energy issues for 20 years as the manager of state regulatory affairs at both ANR Pipeline and then MISO. He has written articles for Transmission Hub, Generation Hub, and The Cruthirds Report. He also covers local news for the Broad Ripple Gazette.

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