Michigan s. Energy Future. Balancing Our Energy, Environmental and Economic Needs

Transcription

1 Michigan s Energy Future Balancing Our Energy, Environmental and Economic Needs

2 Electricity use is growing Michigan s energy, environmental and economic needs are linked A reliable energy supply, clean environment and healthy economy are tightly linked. Balancing these priorities the 3 E s is critical as Michigan and the federal government set policy and commit resources for the 21st century. Consumers Energy is partnering with many different groups who have a stake in Michigan s environment, energy and economy, and sharing three important findings: Michigan needs new, electric generating plants to supply growing demand, as found by the Michigan Public Service Commission in its Capacity Need Forum Michigan s air environment is at its cleanest in modern times, and Consumers Energy is committed to being a good, responsible environmental partner Our economy has grown, energy use is up INDEX: 1980 =100 Michigan and National Electric Use and Gross Domestic Products Sources: EPA, EIA and Bureau of Economic Analysis Electricity use is increasing U.S. Gross Domestic Product: +110% U.S. Electricity Use: +77% Michigan Gross State Product: +72% Consumers Energy Electricity Use: +35% Since 1980, the country s gross product our national economy is up 110 percent, while Michigan s gross state product our state economy is up 72 percent At the same time, electricity use nationally is up 77 percent and electricity use by Consumers Energy customers is up 35 percent Michigan s population has grown 9 percent since 1980 The average Consumers Energy customer is using 8 percent more electricity than 10 years ago The number of electrical appliances is growing - Computers, multiple TVs, air conditioning - Plasma screen televisions use four times more electricity than standard TVs - Many appliances use power in standby mode 1 2

3 Clean air for Michigan INDEX: 1980 =100 National Emissions Reductions Sources: EPA, EIA and Bureau of Economic Analysis Michigan s air is at its cleanest in modern times Air quality has improved every year for more than 30 years, even with: - More cars being driven - Average Consumers Energy customers using 8 percent more electricity than 10 years ago Nationally, our air quality also is improving: - NO x (nitrogen oxides) have been reduced by 43 percent - SO 2 (sulfur dioxide) has been reduced by 40 percent Electric Utility SO 2 Emissions: - 40% Electric Utility NO X Emissions: -43% Consumers Energy is doing its part We have reduced sulfur dioxide, a precursor to acid rain, by 80 percent since 1975 We have reduced NOx, a component of smog, by 70 percent since We are investing more than $800 million from 2003 to 2007 to further reduce NOx We are testing mercury emissions technology and will comply with evolving Environmental Protection Agency and state standards The United States is the first, and so far, the only nation to regulate mercury emissions at power plants - Michigan is adopting standards that go beyond the federal guidelines. We are voluntarily participating in Power Partners, a U.S. Department of Energy and industry program aimed at reducing emissions of carbon dioxide (CO 2 ), a greenhouse gas Reducing Emissions SO % REDUCTION NO x % REDUCTION

4 Coal plays key role Coal is key to reliable and affordable electricity Coal is an abundant, low-cost native fuel 57 percent of Michigan s electric generation is from coal 26 percent comes from nuclear 13 percent comes from natural gas Consumers Energy and Regional Electricity Fuel Sources Biomass Oil Hydro Solid Waste Wind Wood Other Biomass Hydro Oil Gas Solid Waste Wood Coal is the logical choice for Michigan s future Coal is the lowest-cost energy source There is an abundant, low-cost domestic supply - United States has hundreds of years of proven coal reserves The newest generation of coal plants are cleaner and more efficient Renewables will continue to play an important role, but cannot meet current or ongoing baseload needs Nuclear contributes to clean air, but new plants are costly and spent fuel storage issues are unresolved Natural gas has price volatility and long-term supply concerns Gas Coal Nuclear Coal Considering the Future Costs of New Generation Nuclear Fuel types used to produce Consumers Energy s total electricity Regional average fuel mix used to generate electricity 4.5 TO 6 TO 7 /kwh 6.5 TO 7.5 /kwh 7 TO 8.5 /kwh 5.5 /kwh Coal Renewables Natural Gas Nuclear Source: U.S. Energy Information Agency 5 6

5 It s time to act It is time to plan for Michigan s energy future Michigan s baseload generating plants are nearing the end of their life spans - Consumers Energy coal plants are an average of 46 years old - Detroit Edison coal plants are an average of 44 years old It will take at least six years to build a new baseload power plant; the time to act is now Michigan s Baseload Plants are Aging Average Age 44 Years Detroit Edison Average Age 46 Years Consumers Energy Barriers to building new generation Requires a large upfront financial investment of over $1 billion, but: - Costs can t be recovered until plant is completed creating cash flow problem Michigan s Electric Customer Choice law allows customers to switch back and forth between electric suppliers - Creates difficulty in planning for long-term investments, cost recovery and supply needs Siting and permitting approvals create additional uncertainty - Land-use issues and Not In My Back Yard concerns 7 8

6 Global climate change Greenhouse gases are the next challenge Naturally occurring atmospheric gases, also called greenhouse gases water vapor, carbon dioxide (CO 2 ), methane, nitrogen oxides and others trap some of the energy and retain heat, somewhat like the glass panels of a greenhouse. According to the U.S. Environmental Protection Agency, temperatures would be much lower than they are now without this natural greenhouse effect. Mandatory requirements to limit CO 2 emissions do not exist in the United States but appear likely in the long term. Carbon is a common element on the planet, and immense quantities are dissolved in ocean water and found in the atmosphere, soils 3% - Man-made and certain rocks. The most significant natural sources of CO 2 are releases from the oceans and land. Global man-made sources of greenhouse gases (GHG) which include CO 2 account for just 3 percent of the earth s total output. 97% - Natural Global Sources of Greenhouse Gases The principal man-made source of carbon dioxide is the combustion of fossil fuels for example, cars, home heating systems, factories and power plants. GHG Reduction Projects Conversion of auxiliary boilers to 100 percent natural gas and main boilers to cofire natural gas and oil at Karn Generating Complex (Units 3 and 4) Increased availability at Palisades Nuclear Plant due to improved management and maintenance from baseline period Consumers Energy is voluntarily reducing greenhouse gases Reduction (CO 2 tons equivalents) 572,000 16,160,000 EPA Natural Gas Star methane reductions 28,500 Increasing the use of fly ash generated at coal-fired power plants to reduce GHG emissions related to cement production 87,000 Biomass generation 3,353,000 Wind generation 10,500 A significant part of Consumers Energy s operations is electric power production, primarily through the combustion of fossil fuels. This makes CO 2 the most common greenhouse gas that the utility produces. We are taking a number of steps to reduce CO 2 emissions, including: A greenhouse gas management program Participating in the Department of Energy s Power Partners Program Participating in the Natural Gas Star Program Reducing natural gas venting and converting oil-fired boilers to natural gas 9 10

7 Focusing on Michigan s future energy needs Michigan needs an energy policy that ensures environmentally sensitive, reliable and affordable electricity. Consumers Energy is a partner in planning for this future, including participation in the Capacity Need Forum led by the Michigan Public Service Commission in 2005, and in development of Michigan s 21st Century Plan. As we have for more than a century, Consumers Energy will continue our tradition of good environmental stewardship in Michigan and in our communities. For more information To schedule a 3 E s presentation, please contact Consumers Energy at (989) or kmfarr@cmsenergy.com. To learn more about Consumers Energy s environmental efforts and view the company s Environmental Assessment of Air Quality and Climate Change Regulations, please visit: /06 5M