Michigan’s energy vulnerability exposed by natural gas scare, bitter cold

Update: Consumers Energy chief: We’re making changes after natural gas crisis

LANSING — Gov. Gretchen Whitmer wants Michigan to learn from this week’s natural gas crisis that highlighted vulnerabilities in the state’s energy grid during bone-chilling weather.

Whitmer, a Democrat, on Thursday called on the state Public Service Commission to investigate the state’s supply — and deliverability — of natural gas, electricity and propane, and examine contingency plans. An initial report is due July 1.

The move came after Consumers Energy, one of the state’s two mammoth utilities, struggled to keep gas flowing to 1.8 million customers after a fire knocked a gas compression station offline during the coldest weather Michigan had seen in decades.

“It’s important we get a handle on what’s happened here and how we make sure that we are in a stronger position the next time we confront something of this nature,” Whitmer said at a press conference Thursday.

Experts call the scare a reminder of Michigan’s multi-billion dollar infrastructure challenges and opportunities for utilities to cut energy demands through efficiency.

Here are a few things to know.

What happened?

A fire Wednesday morning at Consumers’ Ray Natural Gas Compressor Station in Macomb County walloped the company’s supply during a polar vortex.

“In our 130 years, we’ve never experienced this kind of demand or these kinds of temperatures,” Patti Poppe, Consumers president and CEO, said Thursday.

[Disclosure: Consumers’ philanthropic arm, the Consumers Energy Foundation, and the state’s other major energy provider, DTE, are funders of The Center for Michigan, a nonprofit organization of which Bridge is a part.]

During Wednesday’s sub-zero temperatures, the utility moved a record 3.3 billion cubic feet of gas throughout the state, up from 2.5 billion cubic feet on a typical winter day, Poppe said.

The company had enough gas to meet demand, she said, but needed extraordinary measures to keep it flowing to customers after the fire.

Among other things, the utility and Michigan asked residents statewide to turn down thermostats to 65 degrees until midnight Friday. It rerouted gas supplies from other facilities and pipelines, while large industrial customers also reduced gas use, including automakers that shut down plants.

Warren Mayor Jim Fouts announced on Facebook that his entire city –  the third-largest in Michigan – was due to have gas cut until the auto plants went idle. (Consumers disagrees with the account.)

The measures –  which included sending mass alerts to mobile phones asking residents to conserve –  reduced gas demand by 10 percent.

The mishap brought to light that the Ray compressor station, which consists of three plants, collectively handles some 64 percent of Consumers’ gas in Michigan.

Whitmer said she’s concerned the company is so reliant on one facility. The state needs more reliable energy sources, she said, because more volatile weather is likely due to climate change.

Vulnerable infrastructure

Consumers has not said what caused the fire. But the episode came as the state’s utilities have dramatically boosted spending to replace aging gas pipelines and other equipment.

Poppe said she would not attribute the fire to old equipment because the Ray facility had seen significant upgrades.

The federal Pipeline and Hazardous Materials Safety Administration has flagged about 5,688 miles of “at-risk” natural gas pipe in Michigan, about 50 percent of those in agency’s the 11-state Central Region. Michigan has about 66,000 total miles of natural gas pipelines.

(At-risk pipelines are defined as unprotected and protected bare steel, unprotected coated steel, cast or wrought iron, and copper pipe that is more susceptible to corrosion or leaks.)

In 2016, a commission assembled by then-Gov. Rick Snyder called replacing those pipelines “one of the state’s most pressing issues regarding its energy future.”  

Consumers is in the sixth year of a $2 billion plan to replace 2,200 miles of its 28,000-mile gas distribution network.

Pleas for efficiency

Consumers’ pleas to cut gas demands illustrated the importance of efficiency, experts say. Energy conservation also cuts pollution and lowers energy bills.

Bill Rustem, a former adviser for Michigan governors and an expert in environmental policy, noted his home wasn’t straining gas supplies because he had invested in an ultra-efficient groundwater heat pump to stay warm.

He said Michigan, whether through new incentives or tax credits, has big opportunities to encourage residents to weatherize homes and cut energy use.

“Where do you put your money is the basic question. Do you build more capacity  so you can pump more gas — and send out more gas, or do you conserve?” Rustem said. “We still have a whole lot of houses in Michigan that aren’t very well insulated, but people can’t afford to do the insulation.”

Douglas Jester, a partner at 5 Lakes Energy, a Lansing-based clean energy consulting firm, said a program at the City of Holland’s municipal utility holds promise for helping residents pay for efficiency upgrades: on-bill financing.

That allows customers to borrow money for upgrades and repay that loan on the utility bill. If done correctly, customers would save more on monthly energy costs than they would pay towards the loan.

Jester said Michigan utilities outside of Holland have yet adopt on-bill financing, which the Legislature authorised under a landmark energy reform of 2016.

The state’s energy overhaul requires utilities to submit “integrated resource plans” to the Public Service Commission for approval. These are essentially roadmaps for ensuring reliable, lowest-cost options for customers.

Consumers makes energy efficiency a key piece of its plan, through “demand response” — paying people to ramp down energy use at peak demand times — and other tools.

“The increased use of demand management tools such as energy efficiency and demand response programs will give customers more control over their monthly energy bills, equipping them to save energy and money over the long term,” the plan’s executive summary says.