Michigan utilities buy 2,924 Mw to meet summer demand

By the OGJ Online Staff

HOUSTON, May 4 -- Michigan's Detroit Edison and Consumers Energy will have to buy 2,924 Mw of firm electric capacity this summer to provide sufficient reserves, the Michigan Public Service Commission said in its 2001 summer assessment released Friday.

The projected summer peak electric demand for Detroit Edison, a unit of DTE Energy Co., and Consumers Energy, a unit of CMS Energy Corp., is 18,839 Mw, just 529 Mw below their in-state generating capacity.

The PSC said the total generating and purchased power supply for Michigan Electric Coordinated System (MECS), the combined Consumers Energy and Detroit Edison systems, this summer is 22,292 Mw, compared to projected demand of 18,839 Mw, producing an 18% reserve margin.

But the total MECS generating capacity, excluding short-term purchases is only 19,368 Mw, just 2.8% above the projected summer demand of 18,839 Mw. Therefore, the agency reported, Consumers Energy and Detroit Edison again are purchasing firm capacity, or firm capacity options, to provide sufficient reserves.

Detroit Edison has purchased up to 2,174 Mw of firm capacity or transmission rights. In addition, Consumers Energy has acquired up to 750 Mw of firm transmission.

The agency reported Detroit Edison and Consumers Energy plan to meet the projected summer peak demand of 11,160 Mw and 7,679 Mw, respectively, totaling 18,839 Mw, for firm load customers. Edison and Consumers will also supply power to interruptible load customers totaling 688 Mw and 363 Mw, respectively.

Michigan's total retail open access load of 502 Mw is not included in the 18,839 Mw total, the PSC said.

In the past 3 years, nearly 3,000 Mw of new utility and nonutility capacity has been added in Michigan. In June 2001, the first large nonutility plants are expected to come on line. About 600-650 Mw of this capacity is new nonutility generation, which may serve either the retail open access market, utilities in Michigan, or the wholesale market.

1.3% sales rise projected
Virtually all of this capacity is natural-gas fired. As of mid-April, regulators said there was still nearly 700 Mw of independent power capacity available in Michigan for meeting summer peak load.

The agency is projecting Michigan's total electric sales will increase 1.3% in 2001, after last summer's very cool weather. Michigan cooling degree days in 2000 were 697 vs. 905 in 1999.

Offsetting the growth in sales based on expectations of a return to normal weather, regulators said will be reductions due to a slowing economy. Should this summer again be cooler than normal, the PSC said electricity sales will be lower than the projected level. Alternatively, the PSC said, severe hot and humid weather may require interruptible load customers to curtail service.

Last summer's peak load for the MECS was 18,198 Mw, on Sept. 1, 2000. July 30, 1999, remains the historic record peak day, with the most extreme summer conditions ever seen in Michigan.

On that day, Detroit Edison had an actual load of 10,681 Mw, after load management curtailed an estimated 1,150 Mw. Consumers reached 7,460 Mw demand after load management reductions of 450 Mw. Without the reductions, demand would have peaked at 19,741 Mw.

As the result of a mandated 5% reduction in electricity prices, Consumers Energy and Detroit Edison residential customers using 500 kw-hr will pay about $2/month less than in January 2000, the PSC said.

Michigan natural gas sales for the year 2001 are expected to increase 3.2% to 909 bcf from 2000 levels. Regulators said the increase is based on the assumption the 600-650 Mw of gas-fired electric generation coming on line this summer is used for summer peaking purposes only. If these plants are fully utilized for the last one-half of the year, total gas consumption could be about 20 bcf higher than projected.

Michigan natural gas production declined to 242.2 bcf last year and is expected to continuing declining for the foreseeable future, regulators said. Slow growth in production of Antrim gas and reductions in Niagaran Reef production contributed to continued reductions in Michigan natural gas production.

Net interstate deliveries were 560.2 bcf in 2000, not enough to increase underground storage volumes Assuming some demand moderation and less volatility in the price of natural gas, the PSC said storage levels should return to more normal levels this summer and fall, raising net interstate deliveries to 754 bcf from last year's 560 bcf.