Controversial Market Intervention: Keeping the J.H. Campbell Coal Plant Open
In a surprising move, the administration ordered the aging J.H. Campbell coal-fired power plant in Michigan to remain operational through the summer, despite plans for its retirement on May 31. This unprecedented intervention, invoking a prior declaration of an energy emergency, raises numerous questions about the intricacies of U.S. power markets, particularly regarding the financial implications and accountability for the substantial costs involved in maintaining the plant’s operations.
Overview of the Campbell Plant
The J.H. Campbell facility, the last coal plant owned by Consumers Energy, boasts three operational units with a combined summer generating capacity of 1,401 megawatts (MW). The plant’s Unit 1, which came online in 1962, and Unit 2, operational since 1967, are notably older than the average retirement age of 50 for coal plants in the U.S. since 2000. Unit 3, installed in 1980, is relatively younger. After announcing plans to retire the coal facility in 2021, Consumers Energy received approval from the Midwest Independent System Operator (MISO) in March 2022 to move forward with the closure.
Planning and Approval Processes
The planning and decision to close the Campbell plant were not made lightly. Consumers Energy engaged extensively with the Michigan Public Service Commission and MISO to ensure that the removal of these aging generators would not compromise grid reliability. Since 2020, Consumers has added 502MW of wind generation, acquired the 1,055MW Covert combined cycle gas plant, and is on track to implement an additional 515MW of solar power by 2027. This thorough approach acknowledged MISO’s endorsement, which indicated that the regional system had adequate resources to meet demand, as recently affirmed on May 8.
Emergency Order and Its Implications
In a dramatic shift, the Department of Energy issued an emergency order on May 24, mandating that MISO and Consumers continue operating the plant in light of an anticipated “insufficiency of dispatchable capacity” during the summer months. This sudden federal directive contrasting sharply with the methodical planning efforts by both the utility and grid operator raises concerns about the future reliability of energy management strategies and regulatory authority.
Financial Ramifications
A core concern surrounding this intervention is the financial burden it places on Michigan ratepayers. The order neglects to clarify who will be liable for the costs associated with keeping the Campbell plant operational, which could amount to millions of dollars. For context, when First Energy faced a similar situation in West Virginia in 2023, it identified a minimum cost of $3 million per month to maintain its Pleasants coal plant.
Moreover, the economic viability of generating electricity at the Campbell plant is in jeopardy. Units 1 and 2 have become increasingly uncompetitive in the MISO market, with operation and maintenance costs reported to be $45.80 per megawatt-hour (MWh) in 2023. Data indicates that the pricing at Michigan hubs has rarely exceeded $40/MWh recently, implying losses for electricity generated from these aging units.
Coal Supply and Operational Challenges
Additionally, logistical challenges arise concerning the supply of coal needed for the plant’s operations. With permanent closure imminent, Consumers Energy would have been nearing the depletion of its coal stockpile. This could lead to significant logistical interruptions, especially since the initial contracts for coal delivery were set to expire. Given the vast amounts of coal consumed—over 3.7 million tons delivered by rail from Wyoming’s Powder River Basin—the utility may face inflated prices for last-minute coal purchases to keep the plant operational, coupled with expensive shipment and delivery arrangements on short notice.
Operational Efficiency and Capacity Utilization
Operationally, managing an aging facility like Campbell poses its own set of difficulties. Unit 1, specifically, was not designed to adapt easily to fluctuating power demands, which could lead to inefficiencies in energy production. Past analyses show that Unit 1 typically ran at full capacity, a practice that could displace lower-cost energy sources and realistically drive up prices for consumers. The Michigan Public Utility Commission’s Daniel Scripps emphasized that the DOE’s order is projected to escalate energy costs for consumers in Michigan and across the Midwest.
Workforce Dynamics
Staffing concerns also arise from the sudden nature of the DOE order. Utilities usually reallocate personnel from retiring facilities to other active sites within their network, but with the Campbell plant’s closure timeline abruptly altered, the availability of skilled labor to operate safely and efficiently this summer may be compromised.
Regulatory Oversight and Future Considerations
The DOE’s intervention raises broader regulatory questions about who truly governs U.S. energy markets. The meticulous planning by Consumers and MISO should not be undermined by a federal order that disrupts delicate market dynamics. If the order remains in effect, a pressing argument surfaces for Consumers and Michigan regulators to seek reimbursement from the DOE, rather than placing the financial strain onto the utility’s ratepayers. The trajectory of U.S. energy policy hangs in the balance, with the Campbell plant serving as a focal point of this critical access to electricity amid a shifting national energy landscape.