Clean Power Plan What s Next? A Michigan Utility Perspective. Skiles Boyd EPRI Env-Vision Conference May 10, 2016

Transcription

1 Clean Power Plan What s Next? A Michigan Utility Perspective Skiles Boyd EPRI Env-Vision Conference May 10, 2016

2 Today s Discussion Clean Power Plan Background on DTE Energy Drivers on our transformation to a lower emitting generation fleet Preliminary Clean Power Plan Modeling Results for Michigan Continuing to evaluate Clean Power Plan options 2

3 DTE Energy is an Integrated Energy Company, Headquartered in Detroit Strong, Stable and Growing Utilities ~60% of DTE Energy s 2015 Revenue Electric Electric generation and distribution 2.1 million customers Fully regulated by Michigan Public Service Commission (MPSC) Gas Natural gas distribution 1.2 million customers Fully regulated by MPSC Complementary Non-Utility Businesses ~40% of DTE Energy s 2015 Revenue Gas Storage & Pipelines Transport and store natural gas Power & Industrial Projects Own and operate energy related assets Energy Trading Generate economic value and provide strategic benefits 3

4 DTE Energy Generation Facilities Monroe Belle River Fermi II Trenton Channel Echo Wind Park Greenwood River Rouge St. Clair DTE Energy Installed Capacity: Coal 6,700 MW Natural Gas 2,970 MW Oil 333 MW Nuclear 1,160 MW Wind 400 MW Solar 16 MW Pumped Hydro 958 MW Ludington Pumped Storage River Rouge 4

5 Regardless of the Clean Power Plan stay, we will transform our generation fleet to more gas and renewables by

6 Environmental regulations will continue to impact coal plants in the absence of the Clean Power Plan SO 2 and Ozone Standards SO 2 reductions at two DTE plants in 2017 Likely further SO 2 reductions in 2019 New ozone standard will impact existing units and permitting of new generation post 2020 Effluent Guidelines Wastewater upgrades must be completed by Dec. 31, 2023 at latest Clean Power Plan 1 st Interim Period 2 nd Interim Period 3 rd Int. Period Retirements of 2 DTE units due to MATS Original due date for CPP compliance plans Plan submittal dates will be moved back if Clean Power Plan is upheld, but uncertain whether compliance periods will change. Other regulations impacting existing plants over the next decade include the Coal Combustion Residuals rule, Section 316(b) cooling water intake requirements, SO 2 and ozone requirements, and ongoing New Source Review enforcement. 6

7 Assumed coal plant retirements in Michigan are key to modeling results that show CPP compliance State of Michigan Modeling: Preliminary baseline modeling released in late 2015 indicated that Michigan can meet Clean Power Plan goals through 2025 with a no regrets energy strategy Assumes already announced retirement of 25 coal plants by 2020 Investments would need to be made prior to 2025 in order to comply Michigan Utility Modeling by EPRI: Under reference assumptions, without the CPP, Michigan will be largely in compliance with the existing mass target. Assumes 5.4 GW of coal retirements between 2015 and 2030 Ultimately, least cost compliance with the CPP (rate or mass) requires Michigan coal generation to fall by at least 30% in 2030, relative to 2005 Strong cost saving opportunities from participating in compliance markets for ERCs (rate) and Allowances (mass) 7

8 TWh EPRI Reference Case for Michigan shows decline in assumed coal retirements and growth in new Wind and new NGCC by EE New Solar Ex Solar New Wind Ex Wind Hydro Gas Turbine New NGCC Ex NGCC New Coal Ex Coal Other Geothermal New Nuclear Ex Nuclear Scenario Load

9 EPRI Reference Case Compliance for Michigan with the Existing Units Mass Target Million Short Tons CO NOTES: Reference line tracks emissions from affected units. Decline pre-2030 is driven by planned and likely coal unit retirements, then by existing NGCC retirements. Results are based upon merit order dispatch in an economic model Target Reference Michigan likely below the CPP mass target under reference assumptions, with some uncertainty in the timeframe.

10 We will continue to work in Michigan on energy policy that can adapt to changing federal regulatory policy Within a week of the Supreme Court stay, Michigan announced that it would suspend compliance activities to comply with the Clean Power Plan. Concurrently, Governor Snyder signed the bipartisan multi-state Governors Accord for a New Energy Future that commits the state to support the development of an energy policy that is adaptable, affordable, reliable and protective of the environment. The Governor has indicated a commitment to make decisions regarding Michigan s energy future to ensure an improved planning process that is able to manage regulatory uncertainties like the Clean Power Plan stay. We will continue to work with legislators in Lansing to develop energy policy that supports the transition to less coal and more natural gas and renewables, while also accommodating whatever form the final carbon regulations take. 10

11 During the CPP stay, we will continue to work on evaluating least cost options for compliance with a final carbon reduction rule We will continue to work with industry associations and other groups to refine our thinking around optimal approaches. Key areas of focus include: Leakage demonstrations for states Allocation methods for allowances, and ERCs Trading markets Options for trading between mass-based and rate-based states Understanding differences between models Effective early action incentives, including CEIP 11