As Michigan Gov. Rick Snyder's energy policy forum process kicks off, one question that has to be on the table is "What does Michigan plan to do with its coal-fired generation?" Ontario has asked that question and has answered by announcing the retirement of all of its coal fired generation by the end of 2014. Should Michigan follow this lead, understanding that it currently has a different generation mix? What does the "data" say? If one is looking for certainty in fuel prices, one need look no further than wind or solar---no future cost escalation there. [Delivered coal prices have doubled in recent years; who can predict natural gas prices?].
A recent study by the Michigan Environmental Council suggests that Michigan pays $1.5 billion in health-care costs and damages each year due to pollution from in-state coal fired generation. Consumers Energy has announced $6.5 billion in expenditures through 2017, in part to upgrade old coal-fired power plants. But are upgrades the right policy? The technology driven airline industry is retiring planes earlier and earlier in a massive cost cutting effort. When is the right time to schedule the retirement of coal-fired plants to save money by looking at new electric generating technology and new ways of doing business? To quote a proverb, "There may be no time like the present."© 2014 Varnum LLP