Electric generating capacity and purchases from out-of-state should provide enough of a cushion to assure adequate power supplies to meet Michigan’s peak air-conditioning load this summer, according to a report recently issued by the Michigan Public Service Commission (MPSC).

The positive prognosis by the MPSC was included in a report issued by the state commission titled “The Michigan Energy Appraisal,” which is a semi-annual assessment of the state’s energy markets. The assessment assists in identifying potential supply problems including adequacy of supply, weaknesses in the distribution system and energy price changes.

In the report, state regulators note that Detroit Edison and Consumers Energy plan to meet summer peak demands of 11,160 MW and 7,679 MW, respectively, totaling 18,839 MW, for firm load customers. This does not include 688 MW and 363 MW of interruptible load customers for Detroit Edison and Consumers, respectively, that would be served on an economic availability basis, the report added. Michigan’s total retail open access load is currently 508 MW and is also not included in the 18,839 MW total.

Turning to supply issues, the MPSC points out that it has asked Detroit Edison, Consumers and American Electric Power (AEP) to provider information on their plans to meet summer demand, given the tight supply situation in recent summers. According to the state commission, the total generating and purchased power supply for the combined systems of Detroit Edison and Consumers is 22,292 MW versus projected demand of 18,839 MW, offering a reserve margin of 18%.

However, stripping out short-term purchases, the total generating capacity of the combined systems for Detroit Edison and Consumers is only 19,368 MW. That figure is only 2.8% above the projected summer demand of 18,839 MW, according to the MPSC assessment. As a result, the two companies are purchasing firm capacity, or firm capacity options, to provide sufficient reserves, the report added. Specifically, Detroit Edison has purchased up to 2,174 MW of firm capacity or transmission rights, while Consumers has acquired up to 750 MW of firm transmission.

Both units at AEP’s 2,000 MW Cook nuclear power plant are currently online and should be available this summer, according to the state commission. The plant provides additional capacity in Michigan and the state’s transmission import capability is greater with the Cook facility back on line, the MPSC noted.

According to the MPSC, nearly 3,000 MW of new utility and non-utility capacity has been added in Michigan over the past three years. In June, the first large non-utility plants are expected to come on line in the state. About 600-to-650 MW of this capacity is new, non-utility generation, which may serve either the retail open access market, utilities in Michigan, or the wholesale market and virtually all of the capacity is natural gas-fired, the report added. Also, as of mid-April, there is still nearly 700 MW of independent power capacity available in Michigan for meeting summer peak load, the MPSC noted.

Meanwhile, Michigan natural gas sales levels in 2001 are expected to pick up slightly to 909 Bcf, or 3.2% higher than in 2000, according to the report. But this projection assumes that the 600-to-650 MW of natural gas-fired electric generation coming on line this summer is used for summer peaking purposes only, the MPSC pointed out. If these plants are fully utilized for the last half of the year, total gas consumption could be about 20 Bcf higher than projected.

As for supply, the MPSC states in the report that Michigan’s natural gas production declined to 242.2 Bcf in 2000. Slow growth in production of Antrim gas and reductions in Niagaran Reef production are contributing to continued reductions in Michigan natural gas production, the report goes on to say, with further reductions expected for the foreseeable future. Assuming some demand moderation and less volatility in the price of natural gas, storage levels should return to more normal levels through the summer and into the fall, according to the report. If storage levels are moved to more normal levels, net interstate deliveries will increase significantly this year to 754 Bcf from last year’s 560 Bcf.

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