Local Utilities Shun Coal, Promote Renewable Energy

Coal has become a dirty word to the four electric utilities that serve the pristine Grand Traverse region.

Traverse City Light & Power, Cherryland Electric Cooperative, Great Lakes Energy Cooperative and Consumers Energy all are touting plans to reduce or eliminate their dependence on fossil fuel to lower carbon emissions.

They are rapidly moving to distribute more electricity from cleaner sources of energy, primarily wind, solar and landfill gas, as the cost of renewables falls and concern grows about the impact from emissions of coal-fired power plants on climate change.

Light & Power, Cherryland and Great Lakes Energy purchase all of their power from other utilities.

“We’re currently at 18 percent of our power being generated by renewables, the highest in the region,” said Rachel Johnson, member relations manager at Grawn-based Cherryland. “If you factor in nuclear, we’re 56 percent carbon-free. We’ll probably be at 70 percent in three years.”

Cherryland serves 35,000 customers, mostly residential, in six counties in northwest Michigan. It purchases all its power from Wolverine Power Cooperative, which is owned by Cherryland and six other member-owned cooperatives. Cherryland had revenues of $50.1 million last year.

Wolverine, based in Cadillac, operates seven power plants, all of which run on either natural gas or diesel fuel. It also purchases power from other utilities.

Another Wolverine member-owner is Great Lakes Energy Cooperative in Boyne City. Like Cherryland, it purchases all its power from Wolverine. Great Lakes Energy serves 113,029 residential and 10,956 business customers in 26 counties – including Antrim and parts of Kalkaska – along the west side of the Lower Peninsula from Emmet to Allegan and Barry counties. Great Lakes generated revenues of $186 million last year.

In August, Light & Power became the first utility in the state to announce that 100 percent of its energy will eventually come from renewables. The utility purchases 12 percent of its power from renewables and is on track to meet a 15 percent state mandate by 2021. It plans to have 40 percent of its energy portfolio from renewables by 2025 and be carbon-free by 2040.

Transitioning to renewable energy “will help improve our health and save lives,” Traverse City Mayor Jim Carruthers said at the time. “It will protect our beautiful natural resources for future generations and reduce the pollution impacting our climate.”

Light & Power serves 12,500 residential and business customers in Traverse City, and portions of East Bay, Garfield, Elmwood and Peninsula townships. It is restricted by state law to serving Traverse City and contiguous townships.

Eighty percent of the municipal utility’s customers are residential, but they provide just 20 percent of Light & Power’s $34 million in annual revenues. Most of the rest comes from commercial customers. Those percentages haven’t changed much in recent years, said Light & Power Executive Director Tim Arends.

Light & Power also operates the city’s streetlights and manages all traffic signal lights in Grand Traverse County through contracts with the state Department of Transportation and the Grand Traverse County Road Commission.

Jackson-based Consumers Energy, which provides electric service to 49,395 business and residential customers in the five-county Grand Traverse region, announced in June that it will stop using coal to generate electricity by 2040. It also plans to increase renewable energy use from 11 percent today to 43 percent by 2040.

The utility also said it would begin closing its five remaining coal-fired plants in 2023. It plans to reduce carbon emissions by 80 percent by 2040. Consumers CEO Patti Poppe said the utility’s shift toward renewable energy sources will help it “meet the challenges of a new era.”

The cost of producing electricity from renewable sources such as wind and power have been dropping rapidly in recent years. A 2017 report by Lazard, a New York-based financial advisory and asset management firm, found that the cost to produce one kilowatt hour of electricity in North America from solar power was $50, slightly less than half the cost of coal power at $102 per kilowatt hour.

The per kilowatt hour cost of wind was $60, while natural gas was $45 per kilowatt hour. But utilities have a long way to go in reducing their use of fossil fuels.

Midwest utilities still produce 49 percent of their power from coal and 17 percent from natural gas, according to the Michigan Public Service Commission. Solar and wind power represent just over four percent of the power generated by these utilities. Much of the rest comes from nuclear power.

Critics of solar and wind power say they are unreliable energy sources because they don’t generate power when the sun doesn’t shine and the wind doesn’t blow. But proponents say rapid advancements in energy storage systems are making these renewable energy sources increasingly viable.

In addition to moving to cleaner sources of energy, local utilities are focusing on operating more efficiently in what has traditionally been a slow-growing revenue business, even as the region’s population and economy have expanded.

Cherryland’s revenues, for example, have grown just three percent between 2012 and 2017, from $48.8 million to $50.6 million. Its 58 employees represent one employee for every 639 service lines, more than double the average for electric cooperatives nationwide, Johnson said.

New housing growth in the region has resulted in Cherryland adding 1,935 new member/customers since 2013, up more than five percent, Johnson said.

Light & Power has 38 employees, down seven from 2010 as the utility has consolidated functions, Arends said. The utility’s service area is largely built out, constraining growth.

But the utility is planning to grow revenues by offering high-speed internet service to  all its customers through its fiber optic backbone, hopefully by the end of next summer, he said.

Light & Power recently received 15 proposals to build and operate the system, which would initially serve downtown, the Central Neighborhood and the Eighth Street corridor. Arends said the utility’s board is expected to pick the winning bidder by the end of December.

“We expect to have our first customers this time next year,” Arends said.