- Michigan’s clean energy mandate requires a transition to entirely renewable sources by 2040, complicating the future of the Upper Peninsula’s new natural gas plants.
- The recent $277 million investment in natural gas infrastructure in the UP is being scrutinized as the state seeks to align its energy policies with its climate goals.
Michigan’s new climate legislation mandates that utilities shift to entirely “clean” electricity sources by 2040, presenting a challenge for the Upper Peninsula (UP) and its recent natural gas plants. The state’s Public Service Commission (PSC) is tasked with devising a strategy that considers the unique needs of this expansive, rural region, which has historically faced high utility rates and power reliability issues.
Chair Dan Scripps highlighted a potential advantage for the UP in the energy transition. Due to its hydroelectric assets, including several dams, the region already derives a higher percentage of its electricity from renewable sources than the rest of Michigan.
A pivotal moment occurred in 2013 when Cleveland-Cliffs, an iron ore mining company, shifted from the coal-burning Presque Isle Power Plant to a new energy provider. This switch was facilitated by a 2008 law that allowed mining companies to select their energy sources. Cleveland-Cliffs, the Presque Isle plant’s largest customer, accounting for about 85% of its load, contributed to its closure. We Energies, the Wisconsin utility managing the coal plant, decided to shut it down due to impending federal pollution standards.
However, the Midcontinent Independent System Operator (MISO), which oversees regional transmission, opposed the shutdown, arguing it would destabilise the grid. As a result, the cost of maintaining the coal plant was transferred to UP customers, leading to increased utility rates.
In response, the PSC approved a plan in 2017 to replace coal with natural gas. The $277 million investment funded two natural gas stations in Baraga and Marquette counties, operated by Upper Michigan Energy Resources Corp. (UMERC), a subsidiary of Wisconsin’s WEC Energy Group.
The new plants, featuring ten reciprocating internal combustion engines (RICE units), went online in 2019 and were designed to be operational for decades. Cleveland-Cliffs agreed to cover half the $277 million investment over 20 years, with the remaining costs borne by residents and businesses.
Scripps noted that these natural gas units were installed to address specific needs in partnership with the region’s largest customer, Cleveland-Cliffs. However, with Michigan’s clean energy goals in mind, the PSC must now address the future of these natural gas plants. The legislation identifies explicitly these plants as a potential obstacle to meeting clean energy requirements, prompting the commission to determine a path forward.