Assumed normal weather for next winter and the addition of another 2,400 MW of gas-fired power generation this summer on top of the 1,000 MW last summer should lead to a 6.7% increase in gas deliveries in Michigan this year, the Michigan Department of Consumer & Industry Services said in its semiannual energy appraisal. The department said it expects 905 Bcf of gas deliveries this year.

This past winter was 12.5% warmer than normal, based on Lansing temperatures, the department said, resulting in significantly less gas demand. However, March was very cold with 1,031 heating degree days compared to 1,061 in January and 938 in December.

Meanwhile, gas-fired generation has grown significantly at a time when in-state production has declined. Michigan gas production is expected to drop to 214.3 Bcf this year from 232 Bcf last year and 263 Bcf in 1999. However, excess gas in storage will enable the state to meet demand without increasing interstate pipeline deliveries, the department said. Net interstate deliveries are projected to be down to 587.3 Bcf in 2002 from 736.2 last year. Interstate deliveries in 2000 reached 579.6 Bcf. The state agency expects increased reliance on storage this year to result in storage levels of 393 Bcf in December, “which is more in line with levels that reflect normal operating conditions.”

Based on utility gas cost recovery (GCR) factors, Michigan’s consumers should see slightly higher gas costs this year particularly if summer demand increases for power generation or the early winter is colder than normal. The Michigan Public Service Commission has given temporary authorization to DTE Energy to charge a maximum of $3.62/Mcf for January gas deliveries and $4.38 for the remainder of the year. Consumers has filed a GCR plan requesting $3.50/Mcf for April 2002 through March 2003 and SEMCO requested $3.83 for a 12-month period beginning in April.

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