Natural gas plants in UP are 'clean' energy sources, House bills contend

• A House committee advanced legislation Tuesday to carve out room for two UP utilities’ gas power plants in Michigan's clean energy law
• Bill proponents say the legislation would protect Yoopers from energy prices spiking if the plants have to shut down ahead of schedule to meet clean energy standards
• Environmentalists say fears of price spikes are premature, and the clean energy law won’t necessarily force the plants to shut down

Technically, natural gas isn’t clean, renewable energy  — the combustible fossil fuel is made up mainly of methane, a potent greenhouse gas, and Earth’s finite stores will eventually run out.

But some Michigan lawmakers believe the Upper Peninsula’s gas plants should be deemed acceptable under Michigan’s 2023 clean energy law.

In a bipartisan vote, the House Energy Committee on Tuesday approved two bills, House Bills 4007 and 4283, that would deem natural gas plants owned by two UP utilities as clean and renewable sources under that law, which aims to get the state mostly off fossil fuels by 2040.

Bill sponsors contend without the change, the plants that were built just a few years ago to help the UP ditch coal could be forced to shut down before they’re paid off, spiking energy costs for residents and industry. 

“We are facing a critical juncture, and we need an accommodation in order to keep ourselves economically viable in the UP,” said Rep. Dave Prestin, R-Cedar River, and a leading sponsor of the package. 

But environmental groups argue the bills are premature, unnecessary, and politically motivated. They note that the clean energy laws already allow exemptions for utilities that struggle to meet renewable energy deadlines — and the UP gas plants may well qualify. 

“This is the first, but it won't be the last attempt to roll back Michigan's leading Clean Energy and Jobs Act,” said Nicholas Occhipinti, government affairs director for the Michigan League of Conservation Voters. 

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An amended version of the package passed with support from all 10 committee Republicans and two of the committee’s seven Democrats. House Bill 4283 now heads to the House floor, while 4007 is headed to the House Rules Committee.

Michigan’s then-Democratic trifecta made national headlines in 2023 when it passed a bill requiring utilities to get half of their energy from renewables by 2035, and all of it from “clean” energy by 2040.

Clean is a technical term that makes exceptions for some fossil fuel infrastructure. And the deadlines are malleable, with utilities eligible for extensions if the three-member Michigan Public Service Commission finds good cause.

But some fear the law could threaten energy access and affordability in the UP, a geographically isolated region with few residents, some big industrial energy users and a heavy dependence on natural gas. 

Two of the region’s utilities — Marquette Board of Light and Power and Upper Michigan Energy Resources Corporation — closed their coal-fired power plants in 2018 and 2019 in exchange for natural gas-fired facilities called Reciprocating Internal Combustion Engine units.

Compared to the coal that used to power the region, the gas plants are climate-friendly, reliable and affordable. Made up of multiple smaller generators that can be turned on and off rapidly to meet changing energy demand, they serve tens of thousands of residents along with the UP’s biggest industrial user: The Cleveland-Cliffs Tilden Mine in Ishpeming. 

The switch from coal has helped the UP drive down overall emissions more than 70% since 2013, while saving ratepayers millions. 

But “recognition of these significant economic and environmental benefits is wholly absent” from Michigan’s clean energy law, Richard Stasik, regulatory affairs director of the Upper Michigan Energy Resources Corp., wrote in February testimony filed with state energy regulators.

Trouble is, the natural gas generators still pollute the air with greenhouse gases, putting them at odds with efforts to quickly get Michigan off fossil fuels.

The Upper Michigan Energy Resources Corporation generators alone cost $277 million to build, and still have 25 years of useful life left. Stasik told state energy regulators in February that meeting the 2040 clean energy deadline could force them offline a decade earlier than planned.

He said that would create a stranded cost for customers, who would also foot the bill to install billions of dollars-worth of replacement renewable energy. Spokespeople for the company said it’s too early to predict the size of that stranded cost.

Prestin and Rep. Karl Bohnak, R-Deerton, responded with the bills to grant the plants clemency. The package has support from the Marquette City Commission, unions and economic development officials and Cleveland Cliffs, owner of the Tilden mine.

The mine is the Upper Peninsula's largest energy user, and would be hit particularly hard if the natural gas units shut down. It sucks up more than half of Upper Michigan Energy Resources Corporation’s annual load — an amount equivalent to powering 100,000 homes. 

Tilden is slated to close in 2047, causing energy demand to plummet just as the natural gas plants are reaching the end of their usable lifespan. Closing the plants early could force Upper Michigan Energy Resources Corporation and its customers to install far more renewable energy than they’re expected to need once the mine closes. 

A ‘unique energy profile’

“The current law just doesn’t work for the UP’s unique energy profile that has a single customer with enormous load, and which is going to go away when the ore runs out,” Valerie Brader, an energy consultant who served as former Gov. Rick Snyder’s energy policy chief, told lawmakers during a hearing last month.

Utility officials contend swapping natural gas for renewable energy would cost $3.3 billion over the next 20 years — a bill that would be passed onto ratepayers through surcharges starting at 35 cents a month for residential customers and $64,288 for the Tilden mine in 2026, and rising to a respective $79.72 and $13,916,995 a month by 2045.

That scares Marty Fittante, CEO of the economic development nonprofit InvestUP. He fears high energy costs could chase away industry, hobbling a region that has recently begun to show signs of a rebound from decades of economic malaise.

“One of the cornerstores of having a functional economy is energy,” Fittante said. “If this is to move forward and these rate increases are effectuated, it's going to really be a death sentence for us.”

Renewable energy advocates call the utility’s financial predictions alarmist. They note that investor-owned utilities have a pattern of seeking large rate increases, only to be rebuffed by regulators who find them unnecessary.

“We don't believe that a statement from a profit-driven large utility company should stand in for thoughtful vetting that balances shareholder and ratepayer interests,” Occhipinti said. “The idea that we would take options off the table for what's best for Michigan ratepayers is disappointing.”

Michigan regulators have a system in place to thoroughly review utilities’ long-term energy plans, including cost projections. Clean energy advocates argued lawmakers should let regulators scrutinize UP utilities’ claims of a looming energy crisis before rushing to accommodate the gas plants for decades to come. 

“As a customer of (Marquette Board of Light & Power) myself, I believe it’s in my best interest both financially and environmentally for them to remain accountable to the law and the climate,” said Jane Fitkin, director of Citizens for a Safe and Clean Lake Superior. 

Fitkin noted that the impacts of unchecked climate change – such as disappearing winters and intense storms – are also costing Yoopers money.

Lawmakers knew when they passed the 2023 clean energy laws that achieving that compliance could be difficult in the UP.

They directed the Michigan Public Service Commission to research the issue, resulting in a 2024 study that called for more clarity about what qualifies as a clean energy system.

But the study also noted that advancements in cleaner technologies could reduce the UP’s reliance on natural gas. For example, if hydrogen fuel technologies and availability improve, utilities could use hydrogen gas to power the RICE generators. The UP could also do more to reduce energy waste to drive down overall energy use.