A successful seven-year clean energy program and the declining prices of wind and solar power mean there is less urgency heading into 2016 as Michigan lawmakers continue work on a new statewide energy policy.
While Gov. Rick Snyder’s administration and other stakeholders hoped work on such a comprehensive package would have been done by the end of 2015, there was satisfaction among those who opposed wide-ranging bills in the House and Senate that deliberations will continue.
“There was an expectation before this fall started that we would have a new energy policy by the end of the year,” state Sen. Mike Shirkey, R-Clarklake, told an audience in Lansing last month. “Neither one of the proposals, at least in my opinion, were worthy of [being rushed through]. That whole railroad train has been slowed a little bit.”
The bills also would maintain Michigan’s 10 percent cap on who can participate in electric choice, a proposal that deregulation supporters like Shirkey say would eventually discourage customers from using alternative electric suppliers.
But clean-energy advocates also see a positive in the legislature’s taking more time. As the bills became debated more widely — and reports continued to show the success of the state’s renewable energy law of 2008 — they hope lawmakers will be more convinced of the benefits of those resources.
“Unless they get something that’s better than what we’re doing today, then they shouldn’t pass something for the sake of passing something,” said James Clift, policy director of the Michigan Environmental Council. “We’d like to build on the success that we’ve had to date. All the reports the Michigan Public Service Commission has done on that have shown it has been a pretty wildly successful, given the price of renewables we’re seeing in Michigan and the success of energy efficiency programs.”
A strong clean-energy program not only benefits the environment, Clift said, but ratepayers as well.
“It’s a buyer’s market out there for renewable energy,” he said. “Given recent [federal tax-credit extensions for wind and solar], we think that will continue to be the case.”
Notably, Clift said his organization has seen recent wind power contracts coming in below the cost of running traditional power plants.
“That’s a great indicator that we should continue moving these forward,” he said.
Electric choice cap
Aside from the clean-energy standard, lawmakers are still at odds over how to move forward with Michigan’s deregulation policy, which is capped at 10 percent of a utility’s capacity.
While the main House and Senate proposals look to maintain that cap, deregulation supporters have maintained that revisions to the policy will make it too onerous on electric customers who choose to leave their incumbent utility.
Kelly Rossman-McKinney, spokesperson for the utility-backed group Citizens for Michigan’s Energy Future, said the utilities have already compromised on this front by agreeing to keep the 10 percent cap.
“I’m not sure that I see much more (compromise),” she said. “The proposal doesn’t shut down the choice market at all. It does require those who are providing unregulated electricity to prove they have the capacity to serve their customers for a minimum of two years.”
But electric choice supporters say a series of provisions build off each other to create a system that removes incentives to choose an alternate supplier. Lawmakers like Shirkey and Rep. Gary Glenn, R-Midland, continue to push for a completely deregulated market for electricity.
“We all know and witness it every day that if your hometown has one grocery store, how motivated would they be to keep produce fresh and the floors mopped? Because they have to compete for your business, we get the best product and the best prices,” Glenn told a meeting hosted by a trade association for alternative suppliers last month. “I’m simply unpersuaded that there is anything unique about (electricity) that makes it different.”
Glenn said he spent much of the past year studying up on the issue and hopes to influence the next round of freshmen legislators on the topic.
“I think I can successfully persuade them,” he said.
Glenn introduced legislation in 2015 that would expand the choice market to schools and other public institutions. He is also a proponent of expanding Michigan’s net metering program for customers who generate their own solar energy.
Valerie Brader, executive director of the Michigan Agency for Energy, told the same crowd as Glenn last month that Snyder supports maintaining the 10 percent choice cap.
“He also feels strongly that it needs to be a fair choice, and that companies are contributing to the reliability requirements of Michigan,” she said.
Clean Power Plan strategy
Meanwhile, the Snyder administration is starting the year developing a diverse stakeholder group to help design Michigan’s Clean Power Plan compliance strategy. It plans to submit an initial strategy to the Environmental Protection Agency by September this year, while also seeking a two-year extension to submit a final plan to allow time for an administrative rules process.
On Dec. 22, state officials announced that Michigan could comply with the Clean Power Plan until at least 2025 without changing course. Michigan has to cut its emissions 31 percent by 2030.
Brader said initial modeling showed Michigan is on the right track based on planned coal plant closures, projected energy consumption and increased reliance on natural gas.
“We are well on our way to achieving compliance,” Brader said. “We could essentially stay the course for a decade and stay in compliance.”
But as clean-energy supporters are involved in this year’s planning process, they will likely warn the administration to not over-rely on natural gas and low fuel costs, which are expected to go back up.
“Just what we’ve been doing will get us in compliance,” Clift said. “The tricky thing is doing so affordably and putting downward pressure on rates. We don’t want to make big investments in assets that end up being underutilized.”
Still more inaction?
The legislation proposed in 2015 carried over into 2016, meaning the House and Senate won’t have to restart the committee process or draft new legislation. The 10 percent renewable energy and 1 percent energy efficiency standards have essentially plateaued and remain in place until they are amended.
Aside from Clean Power Plan deadlines, interest groups warning of capacity shortfalls or those who want swift action in their favor, there is no legal urgency for adopting new statewide legislation.
However, there may be political urgency in getting something done. Every other year is an election year in Michigan as state representatives serve two-year terms. Some pundits say lawmakers would likely have to act on energy policy by the spring before it becomes too contentious of an issue on the campaign trail.
“The first rule in an election year is to first do no harm,” said Susan Demas, publisher and editor of Inside Michigan Politics. She said energy policy is “something that can wait until after the election,” given that it’s not relatively time sensitive. “It’s just that a lot of interest groups want it done as quickly as possible.”
If lawmakers don’t act in the first half of the year, Demas envisions a scenario in which a bill package is voted on during the lame-duck session after the election in December.
Clift is more optimistic that a comprehensive energy agreement will be reached despite the pressures of an election, suggesting there is middle ground between opposing parties that will make it easier to resolve.
“It’s a combination of the continued transition to clean energy, the build-out of renewable energy, the continuation of energy efficiency programs we’ve been running, coupled with a greater eye toward ratepayer protection and bringing rates back to the middle of the pack,” he said. And “with some revisions” to the proposed Integrated Resource Planning framework being developed, “It could be a good planning tool for Michigan.”