Consumers Energy has suspended its plans to build its first coal plant in 30 years, but insists the project is not dead.
"This is a timing issue for us. … We will build this plant," said David Mengebier, senior vice president of governmental and public affairs for CMS Energy, Consumers Energy's parent company.
(Read reactions to and comments about the utility's decision
)
The Jackson-based utility announced in September 2007 it wanted to build the $2 billion, 830-megawatt coal plant near Bay City, saying the state needed the power and jobs the facility would generate.
But Mengebier, citing a reduced demand for electricity, cheap natural gas and excess electric capacity in the Midwest market, said company leaders could not make the economic case for it as they prepared to file a Certificate of Necessity later this summer with the
.
"We believe that clean coal and this plant have to be part of our energy mix in the future," Mengebier said. "We just believe the timing for proceeding … is not right, right now."
Critics of the plant's construction said from the beginning that it was not needed and would be too costly, give the current economic conditions. But Consumers had emphasized the plant wouldn't be operational until 2017, and the company believed the state's economy would eventually turn around.
A year ago, the utility filed a report with the MPSC saying the plant was still needed. But Mengebier said as the utility conducted a follow-up analysis recently, it now projects customer demand to be 700 megawatts lower in 2017 than it thought last year.
Opposition from environmental groups and others opposed to Consumers' plans had no impact on today's announcement, Mengebier said.
"This is purely an economic decision and what was in the best interest of our customers at this time," he said.
Mengebier said the decision to defer the development of the plant came during discussions with the CMS Energy Board last week.
The company began softening the ground for such a decision in March during a conference call with analysts and investors.
"Whether we end up building a coal plant or don't, we don't think it has a dramatic impact on our future plans," then President and CEO of CMS Energy David Joos said.
Joos now serves as chairman of the board, and Consumers President John Russell now leads the company.
In that same call Russell told investors, "If we didn't move ahead with the new clean coal plant, we have an abundance of opportunities to invest in the utility."
Mengebier said those options could include making improvements to existing plants, purchasing power on the open market or investing in new combined cycle natural gas plants.
Those decisions will be made when company leaders meet with the board again in August to review the five-year strategic plan.