Report: Michigan will need more electricity as early as 2009

The report on the state's future electric capacity needs said demand for power will grow by about 2 percent a year. The report was based on information collected over a year by the Capacity Needs Forum, which included more than 160 people from 60 organizations.

The state's generation and transmission system will need improvements as early as 2009 to keep up with demand in the Lower Peninsula, the report said. It pointed out several ways to enhance the system, including the use of renewable energy and combined heat and power systems.

"With aging electric plants and increasing demand for electricity, Michigan needs to start planning now to ensure that the lights stay on well into the future," J. Peter Lark, chairman of the Michigan Public Service Commission, said in a written statement.

The commission set up the forum in 2004 to determine how long the state's current generating capacity would be enough, especially with the likely retirement of some older power plants. Members of the forum also looked at ways to recover money invested in new power plants or improvements in existing facilities.

The report suggests setting up a system that allows utilities to recover their investment in a new plant as it is being built, possibly through a surcharge. Such a fee could mean higher rates.

The report said construction on a new power plant may have to start in 2011, depending on the state's economic picture and the results of short-term enhancements.

The Ann Arbor-based watchdog organization, Public Interest Research Group in Michigan, disputed the report's suggestions. PIRGIM Director Mike Shriberg said the state should implement policies that better conserve energy rather than build new coal-fired power plants.

"Michigan has all the energy resources that it needs," Shriberg said in a statement.

"It's time to help consumers save money today. It's also time to adopt solutions that will prevent energy cost crises next year and beyond."

The Public Service Commission's staff wrote the report - the first comprehensive look at the state's electricity needs since 1985 - based on information reviewed and discussed by members of the forum.

Representatives from utilities, transmission companies and advocacy groups participated in the forum, but did not have to sign off on the report.

State regulators could decide to hear comments on the report in the coming months.