Detailed integrated resource plan (IRP)
IRPs typically include the following information:
- Long-term forecast of the electric utility's energy sales and peak demand under various reasonable scenarios.
- Descriptions of the types of generation technology contained in the plan, including proposed capacity of the generation facility(s) and projected fuel costs under various reasonable scenarios.
- The utility’s plan to eliminate energy waste; including the energy waste reduction (EWR) expected to be achieved, the cost of the utility’s EWR plan as well as the expected savings associated with the plan.
- Load management and demand response programs as well as the savings and projected costs for these programs.
- Projected energy purchased or produced by the electric utility from a renewable energy resource(s).
1. UMERC’S forecast
UMERC’s IRP will include, at a minimum, 5-, 10- and 15-year projections of its peak demand and energy load obligations.
Generally, the energy forecasts are prepared by customer classes. Examples of customer classes include residential, small business and large commercial and industrial. Forecasts for each customer class are developed primarily by using statistical models that identify a historical relationship between energy and factors that influence the use of energy, including weather, economic, operational, energy efficiency and trend variables. Largely, the demand forecasts are developed using a combination of historical demand data, load research data relating energy sales to peak demand, and various statistical modeling tools.
2. UMERC’S currently owned generation resources
UMERC began commercial operation of its natural gas-fueled F.D. Kuester Generating Station and A.J. Mihm Generating Station in the Upper Peninsula of Michigan March 31, 2019.
F.D. Kuester Generating Station (128.1 MW) is located in Negaunee Township, near Marquette, and the A.J. Mihm Generating Station (54.9 MW) is located in Baraga Township, near L’Anse. These generating stations provide long-term, dispatchable, reliable, affordable and clean energy solutions to the Upper Peninsula.
There are seven units at the F.D. Kuester Generating Station and three units at the A.J. Mihm Generating Station. These generating stations use a technology known as RICE – reciprocating internal combustion engines. RICE units are highly efficient and provide tremendous operations flexibility. Fueled with natural gas, each engine is shaft-coupled to an electric generator. The RICE units are housed inside a building with an exterior resembling a warehouse. The exhaust system is located outside the building and includes silencers, air quality control systems and stacks.
The F.D. Kuester and A.J. Mihm generating stations replaced the energy from the Presque Isle Power Plant (PIPP) that was retired the same day the generating stations began operation. PIPP’s closure is part of WEC Energy Group’s larger plan to reshape its generation fleet to balance reliability and customer cost with environmental stewardship. Closure of PIPP helps UMERC significantly reduce its carbon dioxide emissions. Plans for the future use of the retired coal plant site will be developed as the company continues to evaluate potential uses for the property.
The state-of-the-art generating stations are expected to save UMERC customers nearly $161 million net present value over the next 30 years. The new stations will eliminate the need for additional transmission capacity as well as upgrades that would have been needed at the aged PIPP if it had continued to operate.
3. Energy waste reduction
Michigan requires all utility companies in the state to collect funds for an energy waste reduction (EWR) plan for residential, commercial and industrial customers. The monies collected from the EWR charge pays for energy efficiency, weatherization, load management and conservation programs. The EWR surcharges currently in place collect an amount equal to 2% of UMERC’s retail electric revenues.
EWR surcharges are volumetric for residential customers; for all other metered customers the EWR surcharges are per-meter, with un-metered customers receiving an appropriate fixture charge. The EWR surcharges are incorporated into other itemized charges on customer bills.
UMERC’s EWR programs are administered by Efficiency United. The MPSC selected Efficiency United, a qualified nonprofit organization, to serve as the EWR program administrator through a competitive bid process.
4. Load management/demand response programs
UMERC uses demand side resources to meet some of its capacity requirements. The utility actually has more electric interruptible load than firm load. UMERC has approximately 101 MW of firm load and 180 MW of interruptible load.
UMERC offers several retail electric non-firm tariffs that are open to both new customers to the UMERC system as well as existing customers currently taking firm service and desiring to take non-firm service. UMERC may call upon customers enrolled in its non-firm tariff programs to curtail or interrupt usage when necessary for economic or capacity reasons.
5. Renewable portfolio standard, renewable energy certificates, renewable energy procurement programs
- Renewable portfolio standard and renewable energy certificates
The state of Michigan’s renewable portfolio standard (RPS) requires that 15% of the electricity produced come from renewable energy sources in 2021.
Renewable energy certificates (RECs) support renewable electricity production in the region of generation. A REC represents the environmental benefits of 1 megawatt hour (MWh) of renewable electricity that can be paired with electricity. For every unit of renewable electricity generated and put onto the electricity grid, an equivalent amount of RECs are produced.
RECs verify exclusive use of the renewable electricity within an electricity market by the REC purchaser, when paired with electricity drawn from that electricity market. Retail purchasers of RECs are using and receiving the benefits of that renewable electricity.
UMERC offers its retail customers renewable energy procurement programs and includes the demand for its renewable energy procurement programs in its overall strategy for obtaining RECs in order to maintain compliance with the RPS requirements. The strategy currently includes a portfolio of banked RECs and third-party REC-only purchases.
- Renewable energy procurement programs
UMERC offers voluntary renewable energy programs to its customers as a way to participate in clean power procurement without the need to make significant changes or purchase equipment. Each service area offers its own unique voluntary green programs. The voluntary green pricing programs offered are sourced by RECs, which come from certified biogas generation sources located in Michigan, and do not contain electricity.
The estimated green energy program sales for both rate zones are ~480 MWh annually.
- Energy for Tomorrow renewable energy program
Energy for Tomorrow is an optional rate offered to UMERC’s electric customers in the We Energies service area. The program gives customers the option to pay a per kilowatt-hour (kWh) premium for UMERC to retire RECs to match the customer’s selected percentage of electric usage (25, 50 or 100%) or to retire blocks of RECs. The RECs replace equal amounts of electric generation from traditional sources. RECs purchased for Energy for Tomorrow come from locally sourced biogas.
- NatureWise renewable energy program
NatureWise is an optional rate offered to UMERC’s electric customers in the WPS service area. The program provides customers with the option to pay a premium to purchase 100 kWh "blocks" of Michigan-based renewable energy where each block represents about 15%–20% of a typical customer's electric use. The amount of renewable energy a customer signs up for each month is totaled over the year, and this amount is then used to determine how many RECs to formally retire based on the energy use. RECs purchased for NatureWise come from locally sourced biogas.
Find out more about UMERC’s Energy for Tomorrow and NatureWise renewable energy programs.