January 21, 2016

Sun Doesn't Set on Michigan's Energy Law

Key provisions in Michigan’s energy law will continue into the new year, despite requirements that electric utilities meet renewable energy and efficiency targets by the end of 2015.

Even though lawmakers haven’t adopted bills to update the state’s 7-year-old energy policy, those standards don’t sunset — meaning utilities only will have to maintain current benchmarks unless or until a new law is signed.

Without changes to policy, Michigan’s standards for renewable energy and energy efficiency don’t increase; utilities won’t be required to meet stricter goals than what they’ve already achieved.

Under current law, utilities have to generate at least 10 percent of their electricity from renewable sources — a target they’ve met — and to offer energy efficiency programs to customers with savings equal to 1 percent of total electric sales.

“Life continues on,” said Valerie Brader, executive director of the Michigan Agency for Energy, created in 2015 by executive order from Gov. Rick Snyder to administer the state’s energy programs.

“I’ve heard people say, ‘So that means it expires.’ I just want everyone to be very clear: Absent a repeal, it remains there so the utility could never fall below 10 percent as calculated in the law going forward,” she said. “While it expires in the sense that there’s no new requirement, it does not actually expire from a legal sense.”

Yet Snyder and other interested groups, including utilities, are calling on the Legislature to adopt changes to the law, known as Public Act 295 of 2008.

The administration wants a statewide policy to help guide development of Michigan’s plan to comply with new federal carbon rules, the first draft of which is due next September. The state is tasked with meeting an emissions reduction target of 31 percent by 2030, Brader said.

Utilities also are taking several coal-fired plants offline this year and have said they want more certainty for planning.

The Legislature adjourned until mid-January without taking action on energy. In the House, two bills sponsored by Rep. Aric Nesbitt, R-Lawton, await a vote in the full chamber. In the Senate, the energy and technology committee continues to work with bills sponsored by Sens. Mike Nofs, R-Battle Creek, and John Proos, R-St. Joseph.

Renewable energy and energy efficiency are among the hotly contested issues. The bills would eliminate both mandates.

Utilities, including Detroit’s DTE Energy Co. and Jackson-based Consumers Energy, say the cost has dropped to build renewable projects, and they’ll have no choice but to pursue them to comply with new federal carbon emissions rules known as the Clean Power Plan.

DTE recently said it plans to build two solar projects near Lapeer that can generate 45 megawatts. Utility spokesman John Austerberry didn’t immediately know how much that project would contribute above its 10 percent renewable minimum, but said it provides a cushion to DTE’s target should customer load increase.

Austerberry said DTE also is seeking proposals from prospective vendors to continue efficiency programs through at least 2018, following the expiration of contracts later this year.

“Energy optimization makes a lot of sense. It’s certainly one of the least-cost options when you look at other generation sources, because when you save energy — when your customers are saving energy — you don’t need to provide additional generation,” Austerberry said.

The utilities and Snyder want to end the mandates in favor of a longer-term planning process known as integrated resource planning, as proposed in the legislation.

But proponents of the mandates say utilities would have no incentive to continue renewable or efficiency programs without the requirement they meet specific standards.

The Michigan Public Service Commission, in a report this fall, said electric utilities’ spending on programs to reduce energy consumption in 2014 should save customers at least $1.1 billion over the duration of those programs.

“Clearly, no bill is better than a bad bill, because the existing structure stays in place,” said Martin Kushler, a senior fellow with the Washington, D.C.-based American Council for an Energy-Efficient Economy.

“The existing law is not too bad. There’s some important ways it could be improved,” he said — namely, upping Michigan’s energy waste reduction standard to at least 1.5 percent.

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