DTE Electric agreed to shut down its coal-fired generation by 2032, three years earlier than proposed last year, and add 3.8 GW of renewable generation by the end of this decade, 400 MW more than planned, according to a settlement agreement filed Wednesday with Michigan regulators.
The DTE Energy utility subsidiary will also add 780 MW of storage by 2030, up from 360 MW, support distributed generation on its system equaling up to 6% of its peak load, up from a 1% cap, and donate $38 million to low-income bill payment assistance and energy upgrade programs under the agreement on its proposed resource plan.
DTE expects it will spend more than $11 billion over the next 10 years on the plan, which must be approved by the Michigan Public Service Commission. The agreement reduces costs for ratepayers by about $2.5 billion compared to DTE’s proposal and its previously approved integrated resource plan, according to the Detroit-based utility company.
The agreement accelerates and amplifies elements of DTE Electric’s integrated resource plan, dubbed CleanVision, that the utility proposed in November.
Under the agreement, DTE Electric will seek to add about 2,480 MW of utility-owned renewable generation by 2030 and enter into power purchase agreements for 1,320 MW of renewable energy. It will also add 505 MW of utility-owned energy storage and 275 MW of third-party storage by the end of the decade.
If DTE Electric gets more than half of the planned resources through PPAs, it will be able to receive a financial incentive through a “financial compensation mechanism” based on the after-tax weighted average cost of capital of the company’s total capital structure, according to the agreement.
The agreement accelerates the retirement of the 3,066-MW, coal-fired Monroe power plant, the third largest source of carbon emissions among U.S. generators. Two units will be shuttered by the end of 2028, as in DTE Electric’s initial proposal, but the utility agreed to retire the two remaining units by the end of 2032, three years earlier than proposed. DTE Electric will consider retiring the last two units as soon as 2030.
The agreement includes DTE Electric’s plan to convert the two units at its 1,270-MW coal-fired Belle River power plant to gas-fired peakers in 2025 and 2026. It also pre-approves $125 million in cost recovery for the conversion.
DTE Electric will be able to securitize about $1 billion in its coal plant assets under the agreement. Any remaining net book value of the Monroe plant as of Dec. 31, 2024, will be recovered through a regulatory asset with a 9% return on equity amortized over 15 years.
The utility agreed to seek state and federal funding to reduce the cost of the coal plant retirements and the conversion of the Belle River plant to gas.
The agreement includes a 2% energy efficiency savings target through 2027, up from a proposed 1.5% savings rate.
DTE Electric’s demand response target grows from 855 MW this year to 906 MW in 2027 under the agreement.
The utility agreed to target 150 MW of new DR through a bidding process for Midcontinent Independent System Operator “zonal resource credits” for contract terms of three or more years by MISO’s 2027/28 planning year.
In addition, starting in October 2024, DTE Electric will post annual political disclosure reports on its website detailing contributions of more than $5,000 in aggregate made by DTE entities to any other entity, including non-profit organizations, according to the agreement.
DTE Electric will file its next IRP by December 2026, two years earlier than scheduled. It will develop a plan to engage with overburdened communities on the IRP.
Parties to the agreement include PSC staff, Michigan Attorney General Dana Nessel and environmental, labor and business groups.
“This legal settlement commits DTE to an expeditious transition away from burning coal that is compelled by economics, public health, and climate science,” Shannon Fisk, Earthjustice attorney and director of state electric sector advocacy, said in a statement.