December 26, 2016

Michigan Passes Legislation to Boost Renewables Mandate, Retain Net Metering

Gov. Snyder has said he will sign the legislation into law.

Michigan Governor Rick Snyder plans to sign a set of sweeping energy bills passed by lawmakers this week that stand to significantly boost renewable energy investment in the state.

Senate Bills 437 and 438, which passed in the House of Representatives Thursday, will raise the state’s renewable portfolio standard (RPS) from 10 percent to 15 percent by 2021 and retain the state’s energy optimization standard (1 percent annual efficiency improvement for electric utilities) through 2021. It also boosts incentives for utilities to hit higher efficiency targets, and sets a nonbinding goal to meet 35 percent of Michigan's power needs through a combination of renewable energy and energy conservation by 2025, Crain's Detroit Business reports.

Michigan achieved its 10 percent RPS target at the end of 2015, which led to the development of more 1,660 megawatts of renewable energy capacity and attracted nearly $3 billion in renewable energy investments to the state since 2008, according to the national business group, Advanced Energy Economy (AEE).

The vote “reaffirms to the advanced energy industry and their customers that Michigan is open for business,” said J.R. Tolbert, AEE’s vice president for state policy, in a statement. “By increasing Michigan’s RPS to 15 percent of annual retail electricity sales, the state has the potential to attract an additional $2.5 billion to $4.3 billion in renewable energy investment by 2021.”

Final versions of the bills also rejected utility-backed proposals to eliminate net metering and implement a buy-all, sell-all policy where distributed solar customers are required to sell 100 percent of the electricity they generate back to the utility. Solar advocates say this model creates hidden taxation for customers. The bill also directs the Michigan Public Service Commission to establish a distributed generation tariff process, according to The Alliance for Solar Choice (TASC).

"We still have serious concerns over how the distributed generation tariffs will be calculated based on the language in the bill,” said TASC spokesperson Amy Heart. “It will be critical for the commission to take into account the benefits that individual investments in rooftop solar and other distributed resources provide, such as increasing energy security and reliability and reducing other utility spending.”

Michigan currently ranks 34th in the nation in terms of installed solar capacity with a total of 25 megawatts -- 13 megawatts of which are residential, with 11 megawatts being commercial and just 1 megawatt being utility-scale. With stable and fair policies, TASC anticipates strong solar market growth, more jobs and lower energy bills for customers across the state.

The Michigan legislation also addresses the state’s “electric choice” market, which allows alternative and out-of-state energy suppliers to serve up to 10 percent of the electricity market, typically schools and large businesses. The state’s major utility companies, DTE and Consumers Energy, have spoken out against the electric choice program and sought legislative changes to impose a “capacity fee.”

The Detroit News reports: “Utilities have argued alternative suppliers are not helping to fund investments in the energy grid they rely on, leaving traditional customers to essentially subsidize the network. But critics feared proposed capacity fees could have made choice rates for business and schools uncompetitive or forced them back to DTE or Consumers.”

The new legislation retains the 10 percent cap on electric choice customers, and establishes clear parameters for utility regulators to determine if a fee becomes necessary. Eventually, the choice market could shrink below 10 percent if a large number of customers decide to leave it.

"We now have a statewide energy policy that will save Michigan residents millions of dollars on their electric bills, alleviate concerns about having enough capacity to power the daily activities of 10 million people and find new ways to use our existing energy grid more efficiently,” said Gov. Snyder, in a statement. “Our energy will be more affordable, more reliable and more green. This achievement continues sending the message that Michigan has a very bright future."

Gov. Snyder helped to broker compromise on the energy bills in an overnight legislative session. 

He told reporters this week he would sign the legislation.

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