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December 2011 - Michigan Energy Forum - Valerie Brader

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The December Michigan Energy Forum is themed "The 2011 Year In Review and 2012 Look Forward for Michigan Based Energy Businesses." As an introduction to the evening, we are looking to celebrate the wins and accomplishments made by energy companies in Michigan.

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December 2011 - Michigan Energy Forum - Valerie Brader

  1. 1. Michigan’s Energy Future: Long-Term Good News for MichiganBusinessValerie BraderChief Energy Policy Officer
  2. 2. Strength Now: Energy Reliability Sustained Outages (2010)0.40.30.20.1 0 Nat. Avg. Top Quartile Western LP Eastern LP
  3. 3. Business Rates at National Average 2010 Average Business Rate – (¢/kWh)1816141210 US weighted average* 8.886420 WY WA ID KY UT AR IA OK ND WV OR NE MO IN SD LA MT SC KS MN VA NC NM MS AL IL TX OH GA TN CO WI NV AZ MI PA FL DE ME MD VT RI CA NJ NH DC AK MA NY CT* Weighted by total sales volume (MWh) excluding Hawaii.Source: Energy Information Administration 3
  4. 4. But -- Regional Energy Prices Regional Comparison (May 2011) State Commercial (c/kWh) Industrial (c/kWh) Illinois 8.77 6.10 Indiana 8.81 6.23 Michigan 10.61 7.73 Ohio 9.57 5.87 Wisconsin 10.12 7.22Source: U.S. Energy Information Administration
  5. 5. But Will Costs Stay That Way??• Simple answer: It’s unlikely.• Major driver of power cost is fuel cost. – Generation is about 2/3rds of the average bill in the US, and fuel cost is the biggest single portion of that impact. – Other things (transmission, distribution) matter too, but don’t as a rule drive cost.• Michigan’s natural advantages position us better for the future than they did in the past.
  6. 6. What Fuels MI’s Power Now? 2010 Generation Capacity 2010 Actual Generation Expressed as % by Type Expressed as % by Type 0.0% -0.9% 0.3% 0.5% 0.0% 0.8% 0.8% 0.6% 6.2% Coal 2.3% 0.2% 0.7% Hydro 39.2%13.1% Natural Gas 27.4% Nuclear 60.8% Oil Other Pumped Storage Solar Wind 10.8% 1.1% 36.1% Wood Waste 0.0% Source: Ventyx
  7. 7. Michigan’s Coal Use vs. Others’ Use
  8. 8. Average Cost of Coal by State Average Cost of Coal Delivered for Electricity Generation by State, June 2011 and 2010 (Dollars per million BTU) Census Division/ State Electric Utilities Jun-11 Jun-10 East North Central 2.46 2.12 Illinois 2.03 1.91 Indiana 2.5 2.17 Michigan 2.63 2.07 Ohio 2.31 2.11Source: U.S. Energy Information Administration
  9. 9. Coal in the Future…
  10. 10. MI’s Natural Advantage in Natural Gas • Michigan has more natural gas reserves than any other state in the Great Lakes region. • The Antrim natural gas fields, in the northern Lower Peninsula, are among the largest in the nation. • Michigan has the most underground natural gas storage capacity of any state and supplies natural gas to neighboring states during high- demand winter months.Source: U.S. Energy Information Administration
  11. 11. Why Haven’t We Used More Natural Gas in the Past?Historic Natural Gas Spot and Forward Prices ($/MMBtu) $15 $10 $5 $0 2000 2001 2003 2004 2006 2007 2009 2010 2012 2013 Henry Hub Nymex 12/31/07 Nymex 12/31/09 Nymex 03/07/11 Nymex 07/29/11
  12. 12. Renewables • 2008 law requires electric providers to meet a 10 percent renewable energy standard (based on retail sales) by the end of 2015. • Michigan’s 2009 estimated renewable energy percentage of 3.6% (3/4ths of which is hydro and wood) is expected to increase significantly during the next two years as approximately 700 MW of new renewable energy will become commercially operational by the end of 2012.Source: Michigan Public Utilities Commission (Feb. 2011)
  13. 13. Michigan’s RenewablesSource: Michigan Public Utilities Commission (Feb. 2011)
  14. 14. Nation’s Predicted Energy Mix 2000 OTHER RENEWABLE 76 (TWh), 2.0% OTHER NON- WIND RENEWABLE 6 (TWh), 0.0% 5 (TWh), 0.0% HYDRO 270 (TWh), 7.0% NUCLEAR 764 (TWh), 20.0% COAL 1966 (TWh), 52.0% 2020 OTHER RENEWABLE 142 (TWh), 3.0% OTHER NON- WIND OIL RENEWABLE 208 (TWh), 5.0% 111 (TWh), 3.0% 21 (TWh), 0.0% HYDRO 267 (TWh), 6.0% GAS 615 (TWh), 16.0% COAL NUCLEAR 1949 (TWh), 42.0% 814 (TWh), 17.0% GAS A terawatt-hour per year is 114 megawatts 1276 (TWh), 27.0%Sources: Wall Street Journal 3/7/11; EIA, Wood Mackenzie International Power Service
  15. 15. Energy Predictions Point to Good Things for Michigan• Gas prices are pushing down toward competitiveness with coal• Michigan, which has no coal, has lots of gas and better storage capability for gas than any other state.• Michigan is well positioned to compete in the future on energy.
  16. 16. What Energy Issues Will I Hear About?• Federal regulation, and timing.• Reliability – Key Issue for Industrial Customers (and others too!)• What should replace Michigan’s aging (coal) plants?• Production Issues (Fracking, Enhanced Recovery with CO2)• 2008 Energy Legislation Reviewed (renewables/customer choice/etc.)

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