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Michigan Electric Michigan Electric Capacity Need ForumCapacity Need Forum
April 22, 2005April 22, 2005
AgendaAgenda
Capital markets and electric generation investmentCapital markets and electric generation investment–– Ellen Lapson, Managing Director Fitch Rating’s U.S. Global PowerEllen Lapson, Managing Director Fitch Rating’s U.S. Global Power
GroupGroup–– Jonathan Cho, Director Fitch Rating’s U.S. Global Power GroupJonathan Cho, Director Fitch Rating’s U.S. Global Power Group
Work group updatesWork group updates–– Work group chairsWork group chairs
Demand/ForecastDemand/ForecastCentral StationCentral StationTransmission/DistributionTransmission/DistributionRenewable/other generationRenewable/other generationIntegrationIntegration
Preliminary reliability numbersPreliminary reliability numbers–– Rao Konidena, MISORao Konidena, MISO
Next meetingNext meeting
Comments of Comments of FitchFitch RatingsRatingsMichigan Electric Capacity Need Michigan Electric Capacity Need
ForumForum
Ellen Lapson, Ellen Lapson, Managing Director Fitch Managing Director Fitch Rating’s U.S. Global Power GroupRating’s U.S. Global Power GroupJonathan Cho, Director Fitch Rating’s U.S. Jonathan Cho, Director Fitch Rating’s U.S. Global Power GroupGlobal Power Group
Demand ForecastDemand Forecast
Chairman Eric Baker, Wolverine Power Chairman Eric Baker, Wolverine Power Staff CoStaff Co--chair Don Mazuchowski, MPSC Staffchair Don Mazuchowski, MPSC Staff
Demand and Energy ForecastDemand and Energy Forecast
Three geographic regions Three geographic regions –– Southeast Southeast Michigan, balance of Lower Peninsula, Michigan, balance of Lower Peninsula, and Upper Peninsulaand Upper PeninsulaForecast period 2005 to 2025Forecast period 2005 to 2025Forecast based on individual Forecast based on individual participants’ forecastsparticipants’ forecastsBase forecast made along with low Base forecast made along with low and high scenariosand high scenarios
Michigan Monthly Electricity Sales
0
2,000
4,000
6,000
8,000
10,000
12,000
Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04
Mill
ion'
s of
kW
h's
1982 to 2004
Source: Energy Information Administration, Electric Power Monthly, prepared by MPSC Staffhttp://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
Residential
Commercial
Industrial
Michigan Electric Demand and Michigan Electric Demand and Energy ForecastEnergy Forecast
Total energy sales growth 1.8%Total energy sales growth 1.8%–– Southeast Michigan energy growth 1.8%Southeast Michigan energy growth 1.8%–– Balance of Lower Peninsula growth 1.9%Balance of Lower Peninsula growth 1.9%–– Upper Peninsula growth .9%Upper Peninsula growth .9%Total electric demand growth 2.1%Total electric demand growth 2.1%–– Southeast Michigan growth 1.7%Southeast Michigan growth 1.7%–– Balance of Lower Peninsula growth 2.7%Balance of Lower Peninsula growth 2.7%–– Upper Peninsula growth .9%Upper Peninsula growth .9%
Michigan Electric Sales Michigan Electric Sales ForecastsForecasts
0
50000
100000
150000
200000Gwh's
2005 2010 2015 2020 2025
Low Base High
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2005 2010 2015 2020 2025
Low Base High
Michigan Demand ForecastsMichigan Demand Forecasts
Michigan Electric Demand by Michigan Electric Demand by Geographic RegionGeographic Region
0
5000
10000
15000
20000
2005 2010 2015 2020 2025
Southeast Balanc L.P. U.P.
Michigan Forecast Electric sales Michigan Forecast Electric sales by Geographic Regionby Geographic Region
0100002000030000400005000060000700008000090000
Gwh's
2005 2010 2015 2020 2025
Southeast Balance L.P. U.P.
Michigan Electricity Historical Sales and Projections
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1990 1995 2000 2005 2010 2015 2020 2025
Prepared by: Demand Working Group Capacity Needs Forum, April 2005
Gig
awat
t-hou
rs
Detroit Edison
Consumers Energy
Balance of Lower Peninsula
Upper Peninsula
Forecast
Michigan Electricity Non-Coincident Summer Peak Demand
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1990 1995 2000 2005 2010 2015 2020 2025
Prepared by: Demand Working Group Capacity Needs Forum, April 2005
Meg
a-W
atts
Detroit Edison
Consumers Energy
Balance of Lower Peninsula
Upper Peninsula
Forecast
Michigan Electricity Sales Forcast RangeBase Case + & - 10%
020,00040,00060,00080,000
100,000120,000140,000160,000180,000200,000
1990 1995 2000 2005 2010 2015 2020 2025Prepared by: Demand Working Group Capacity Needs Forum, April 2005
Gig
awat
t-hou
rs
Forecast
Fuel Price ForecastsFuel Price Forecasts
Department of Energy’s Energy Department of Energy’s Energy Information Agency’s (EIA’s) Annual Information Agency’s (EIA’s) Annual Energy Outlook 2005Energy Outlook 2005Global Insights longGlobal Insights long--term forecastterm forecastOther studiesOther studies
United States Natural Gas United States Natural Gas SupplySupply
2.990.44 1.54
5.66
6.49
4.850.43
2.3
6.37
1.08
5.02
8.61
4.89
2.23
0
5
10
15
20
25
30
35
2002 2025
Alaska
Off-shore
UnconventionalOnshoreConventionOnshoreAssociatedDissolvedLNG
Net Imports
TCF
United States Natural Gas United States Natural Gas Consumption by SectorConsumption by Sector
4.89
3.11
7.53
5.65
1.79
5.99
4.05
9
9.43
2.2
0
5
10
15
20
25
30
35
2002 2025
OtherElectric PowerIndustrialCommercialRsidential
TCF
Energy Information AgencyEnergy Information AgencyLongLong--Term Natural Gas Price Term Natural Gas Price
ForecastForecast
0123456789
10
2010 2015 2020 2025
Dol
lars
/Mcf
Real PriceNominal Price
2003 Price
Natural Gas Price ForecastNatural Gas Price Forecast
0123456789
1997 2000 2003 2006 2009 2012 2015 2018
Real 2003 Dollars Nominal Price
Source: American Gas Foundations
Forecast Price of Central Forecast Price of Central Appalachia Bituminous CoalAppalachia Bituminous Coal
0
10
20
30
40
50
60
2010 2015 2020 2025
Real 2003 PriceNominal Price
Source: EIA
Dollar/Short Ton
Forecast Price of Powder River Forecast Price of Powder River Basin Low Sulfur CoalBasin Low Sulfur Coal
0
2
4
6
8
10
12
14
16
2010 2015 2020 2025
Real 2003 PriceNominal Price
Source: EIA
Dollars/Short Ton
Central Station GenerationCentral Station Generation
Chairman Robert Palmer, Detroit Edison CompanyChairman Robert Palmer, Detroit Edison CompanyStaff CoStaff Co--chair, John King, Commission Staffchair, John King, Commission Staff
Michigan’s Current Generation Michigan’s Current Generation Capacity by RegionCapacity by Region
1110 780
9044
5127
841
1266 8094
240
02000400060008000
100001200014000
SoutheastMichigan
Balance of L.P. U.P.
Nuclear Steam Other
Mw’s of Capacity
Central Station Generation Central Station Generation TechnologiesTechnologies
Pulverized Coal Pulverized Coal –– supercritical and supercritical and subcriticalsubcriticalCirculating Fluidized BedCirculating Fluidized BedIntegrated Gasification Combined Integrated Gasification Combined CycleCycleNuclearNuclearNatural Gas Combined CycleNatural Gas Combined CycleCombustion TurbineCombustion Turbine
Generating Plant Cost Generating Plant Cost AssumptionsAssumptions
Greenfield siteGreenfield siteTransmission cost associated with Transmission cost associated with switchyard includedswitchyard includedOvernight costs includedOvernight costs includedNew pulverized coal would require New pulverized coal would require scrubber, baghouse, and SCR systemscrubber, baghouse, and SCR systemService life assumed to be sixty yearsService life assumed to be sixty years
Production Plant Estimated Production Plant Estimated CostsCosts
10,45010,4503.713.713.713.71350350160160Combustion Combustion TurbineTurbine
6,8006,8002.122.1212.7312.73500500250250Combined Combined CycleCycle
10,40010,400.53.5367.9067.902,2002,2001,0001,000NuclearNuclear
7,2007,2002.922.9238.7238.721,8991,899550550IGCCIGCC
9,5009,5004.004.0028.0028.001,6501,650300300Fluidized BedFluidized Bed
8,6008,6004.564.5627.5827.581,4001,400750750Pulverized CoalPulverized CoalSupercriticalSupercritical
8,8008,8004.564.5627.5827.581,3501,350600600Pulverized CoalPulverized CoalSubSub--criticalcritical
Heat RateHeat RateBTU/kwhBTU/kwh
Variable O&MVariable O&M$/Mwh$/Mwh
Fixed O&MFixed O&M$/Kw$/Kw
Construction Construction Cost $/KwCost $/Kw
Size (Mw’s)Size (Mw’s)TechnologyTechnology
Estimated Busbar CostEstimated Busbar Cost
17117110410466665%5%6.006.00Combustion Combustion TurbineTurbine
53531010434385%85%6.006.00Combined Combined CycleCycle
484842426690%90%.50.50NuclearNuclear
61613838232380%80%2.752.75IGCCIGCC
46463030161685%85%1.251.25Fluidized BedFluidized Bed
42422626151585%85%1.251.25Pulverized CoalPulverized CoalSupercirticalSupercirtical
41412525161685%85%1.251.25Pulverized Coal Pulverized Coal SubSub--criticalcritical
Busbar CostBusbar Cost($/Mwh)($/Mwh)
Fixed CostsFixed Costs(Cap+O&M)(Cap+O&M)
Dispatch CostDispatch Cost$/Mwh$/Mwh
Capacity Capacity FactorFactor
Fuel CostFuel Cost$/MMBTU$/MMBTU
TechnologyTechnology
Estimated Emissions by Estimated Emissions by Technology (#/MMBTU)Technology (#/MMBTU)
000000.03.03.001.001Combustion Combustion TurbineTurbine
1201200000.03.03.001.001Combined Combined CycleCycle
0000000000NuclearNuclear
.01.01.05.05.05.05IGCCIGCC
.015.015.10.10.02.02Fluidized BedFluidized Bed
200200.015.015.03.03.10.10Pulverized CoalPulverized CoalSupercriticalSupercritical
200200.015.015.03.03.10.10Pulverized Coal Pulverized Coal SubSub--criticalcritical
CO2CO2HgHgParticulatesParticulatesNOxNOxSO2SO2TechnologyTechnology
Other GenerationOther Generation
Chairman Donald Johns, Michigan Independent Power Chairman Donald Johns, Michigan Independent Power ProducersProducersStaff CoStaff Co--chair Mark Nida, MPSC Staffchair Mark Nida, MPSC Staff
Other Generation Resources Work GroupOther Generation Resources Work Group
Primary Objective:Develop a series of supply curves or other representations that can be used to model the non traditional technologies deemed capable of providing significant generation resources over the next decade or less.
Expected Deliverables:A set of equations and/or projections of supply that can realistically be expected to be made available I an economicallyfeasible fashion at a given price or prices along with output and emissions characteristics
Other Generation Resources Work GroupOther Generation Resources Work Group
General Principals:General Principals:Roughly Right approachRoughly Right approachCommercially AvailableCommercially AvailableSignificant ImpactSignificant ImpactAggregate Averages for Modeling Aggregate Averages for Modeling PurposesPurposesUse whatever data is practically Use whatever data is practically available available
eneration Resources Work Groupeneration Resources Work Group
Technologies Chosen to be Modeled:Technologies Chosen to be Modeled:Landfill GasLandfill GasAnerobic DigestionAnerobic DigestionOnshore WindOnshore WindIndustrial/large commercial Industrial/large commercial cogeneration at existing sitescogeneration at existing sitesOther emerging technologies to be Other emerging technologies to be addressed in a narrative and purhaps addressed in a narrative and purhaps included as an annual (small) increment included as an annual (small) increment to be added.to be added.
Other Generation Resources Work GroupOther Generation Resources Work GroupPreliminary Results:Preliminary Results:Landfill Gas: 79 MW existing with 70 MW Landfill Gas: 79 MW existing with 70 MW current potential growing at 5% per year@ 7 current potential growing at 5% per year@ 7 cents per kWh.cents per kWh.. 95% capacity factor must run generation . 95% capacity factor must run generation Farm Digestion: 56 MW potential @ 7 cents Farm Digestion: 56 MW potential @ 7 cents per kWh. 96% capacity factor must run per kWh. 96% capacity factor must run generation.generation.Wind:Wind: 420 MW potential @ 7 cents per 420 MW potential @ 7 cents per kWh or $1200 per kW. 25% average kWh or $1200 per kW. 25% average capacity factor.Assumes 50% of all h class 4 capacity factor.Assumes 50% of all h class 4 or greater.or greater.Cogeneration:Cogeneration: Sites greater 100 MLbs per Sites greater 100 MLbs per
TransmissionTransmission
Chairman Tom Chairman Tom VitezVitez, International Transmission , International Transmission CompanyCompanyStaff CoStaff Co--chair Peter chair Peter DerkosDerkos
IntegrationIntegration
Chairman John Dellas, Consumers Energy CompanyChairman John Dellas, Consumers Energy CompanyStaff CoStaff Co--chair Paul Proudfoot, MPSC Staffchair Paul Proudfoot, MPSC Staff
Function And Function And ResponsibilityResponsibility
Oversee integration Oversee integration function(modeling).function(modeling).Review other workgroup products for Review other workgroup products for input into the integration model.input into the integration model.Selection of sensitivities and scenarios.Selection of sensitivities and scenarios.Make sure data used is comparable.Make sure data used is comparable.Select/approve fuel and other Select/approve fuel and other economic data.economic data.
Function And Function And ResponsibilityResponsibility
Review model outputReview model output
Proposed Integration Proposed Integration MethodologyMethodology
Use MISO’s modeling capability to quantify Use MISO’s modeling capability to quantify capacity needs.capacity needs.Use ITC’s power flow modeling to determine Use ITC’s power flow modeling to determine import capacity.import capacity.Use New Energy’s Strategist to select a Use New Energy’s Strategist to select a resource additions plan.resource additions plan.Use Scenarios to quantify Energy Use Scenarios to quantify Energy Conservation and Emissions issues.Conservation and Emissions issues.Regional modeling to reflect constraint Regional modeling to reflect constraint issues.issues.
ScenariosScenarios
Traditional power sourcesTraditional power sourcesEmissionsEmissionsEnergy conservationEnergy conservationNonNon--Traditional sourcesTraditional sources
SensitivitiesSensitivities
High LoadHigh LoadLow LoadLow LoadHigh Gas CostHigh Gas CostMax ImportMax Import