In late May, the Department of Energy (DOE) issued an order to temporarily keep the coal-fired Campbell power plant in Michigan operating rather than retiring. The three-unit 1,450 MW plant had been scheduled to shut down at the end of May. The original order kept the plant open for 90 days. Just recently, DOE extended the original order an additional 90 days to keep the plant running for a total of 180 days.
Section 202(c) of the Federal Power Act gives the DOE Secretary the authority to issue orders that temporarily require power plants that are needed during an emergency to operate until the emergency ends. In issuing the orders for the Campbell plant, Secretary Wright said that “an emergency exists in portions of the Midwest region of the United States due to a shortage of electric energy, a shortage of facilities for the generation of electricity, and other causes,” and the orders will “ensure the Campbell Plant will be available if needed to address emergency conditions.”
According to Consumers Energy, the primary owner of Campbell, the cost to keep the plant operating during the first five weeks of the original DOE order was $29 million. The DOE order has been criticized, in part, because of this cost. However, focusing solely on the cost of operating the plant leaves out half of the story.
Energy Ventures Analysis (EVA) analyzed the operations of the plant during those five weeks to see what the full story is. The analysis shows that operating the plant likely saved ratepayers at least $2 million.
The Campbell plant is required by the DOE order to be available to operate in case of an emergency. Nonetheless, the plant can still operate if there is no emergency if MISO dispatches the plant because its cost of producing electricity is lower than other electricity sources (economic dispatch). During the five-week period, revenue from operating the plant totaled $31.4 million. Had the plant not been available to operate, ratepayers would have had to pay at least $31.4 million to replace the power from other electricity sources whose power prices might have been higher than Campbell’s. Thus, the DOE order saved ratepayers at least $2 million, in addition to providing an insurance policy against electricity shortages.