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Analyst: Electric customers lose money because utilities use coal plants inefficiently

Lester Graham
Michigan Radio

A report from the Union of Concerned Scientists says Michigan's electric utilities are losing money at times because they're using their own coal-burning plants when it would be cheaper and cleaner to buy electricity from market sources.

And that cost is being passed on to consumers.

Joe Daniel is an energy analyst with USC. He says statewide, electric customers pay on average an extra $60 a year on their bills because of the issue, which appears to happen simply because of past practice.

"There was a time when running these coal plants made sense this way, to run them all the time," he says, "but the fact is, market dynamics have changed, and it's no longer economic to run these coal plants like that."

Daniel says DTE is the worst offender. Its Monroe coal burning plant alone lost $19 million in 2019 by operating when the utility could have obtained cheaper and cleaner electricity on the energy market run by the midwest grid operator, MISO.

All told, he says DTE lost $100 million in 2018 by running its coal units uneconomically. Consumers Energy lost $25 million.

He says there is a cost to shutting down a power plant temporarily, but it would still end up being cheaper to buy less expensive energy that's being produced by gas plants and renewables at certain times. 

"So, whether you turn it off a month at a time or weeks at a time, if you can save consumers money by turning off your coal plant, you should," he says.

DTE Energy did not respond to a request for comment. Consumers Energy says it operates its plants based on market decisions made by MISO.

Daniel says several utilities in the U.S. have already commited to using their coal plants seasonally only, or only when it's the cheapest option, and he says the Michigan Public Service Commission should insist that DTE and Consumers follow suit.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.