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Published in Energy
The J.H. Campbell coal plant in Port Sheldon Township. The J.H. Campbell coal plant in Port Sheldon Township. COURTESY PHOTO

Breach of contract dispute surrounds early closure plan for Ottawa Co. coal plant 

BY Sunday, July 24, 2022 07:44pm

PORT SHELDON TWP. — Consumers Energy’s recently approved plan to shut down the J.H. Campbell coal plant in Ottawa County in 2025 has caused a breach of contract dispute between the utility and another electricity provider.

The legal dispute between the Jackson-based utility and Cadillac-based Wolverine Power Supply Cooperative Inc. highlights complexities involving the early closure of fossil fuel plants while utilities transition to clean energy.

The Michigan Public Service Commission on June 23 approved a settlement agreement involving Consumers’ long-term integrated resource plan, which included closing the Campbell plant in 2025, nearly 15 years earlier than initially planned.

Wolverine opposed the settlement agreement, and claims that the early closure would cost the Cadillac-based power supplier more than $37 million while jeopardizing electric reliability for customers. Wolverine President and CEO Eric Baker claimed in an early April letter to Consumers that the utility was violating an operating agreement by closing the plant earlier than planned. 

Consumers has a 94.03 percent ownership interest in the Campbell plant, and Wolverine has a 1.89 percent ownership stake. The Michigan Public Power Agency owns the remaining share of the plant.

Consumers in May filed suit against Wolverine in Ottawa County Circuit Court seeking a judgment allowing it to close Campbell in 2025, to proportionally share in the costs of closing the plant, and to find that Consumers is not liable for Wolverine’s losses under the plan.

“Despite expressly agreeing to do so, Wolverine Power has not cooperated with Consumers Energy” on the 2025 retirement date, according to Consumers’ complaint, which was first reported by MLive.

“Under the applicable contract, Wolverine has a duty to cooperate with Consumers’ decision,” Consumers said in an emailed statement. “We carefully consider any decision to retire a generating facility, making certain to fully understand the impact to employees, communities, the environment and Michigan’s energy needs. We balanced all these factors while creating the Clean Energy Plan that includes retiring our Campbell Generating Complex in West Olive in 2025 — about 15 years faster than currently scheduled.”

Wolverine has denied claims that it’s violating the operating agreement and filed a countersuit on July 18, calling the 2025 closure an “unreasonably aggressive timeline.”

“Consumers’ reckless actions in effectuating an early retirement of Campbell 3 in 2025 not only jeopardizes the reliable supply of electricity throughout rural Michigan, but also significantly damages Wolverine for Consumers’ benefit,” according to Wolverine’s suit.

“Wolverine’s priority is keeping the lights on for more than 268,000 families and businesses across Michigan,” the company said in an emailed statement. “To facilitate that goal, we rely on a number of diverse energy sources and are proud to be leaders in carbon-free energy with a 60 percent carbon-free portfolio.”

The company added that while the premature closure of Campbell “jeopardizes Michigan’s ability to keep the lights on, particularly at a time when our state faces rolling blackouts due to disorderly plant retirements, this case is about Consumers’ actions in breach of the contract and the resulting damage to Wolverine's 260,000+ members.”

Wolverine adds in its response to the initial suit that Consumers made the decision to close Campbell in 2025 “in bad faith and without cooperating or consulting with Wolverine.”

“Wolverine admits only that Consumers unilaterally informed Wolverine Power that it intended to retire Campbell 3 less than an hour before Consumers publicly announced the decision,” according to court filings.

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Read 2945 times Last modified on Sunday, 24 July 2022 19:50
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