March 11, 2015
Michigan

Michigan lawmakers offer dramatically different energy plans

By Kathleen Gray, Detroit Free Press Lansing Bureau | March 11, 2015 | www.freep.com

LANSING – When Gov. Rick Snyder gives a special message on energy issues in Warren on Friday, he’ll be competing with dramatically different plans offered by Republicans and Democrats in recent weeks.

State Rep. Aric Nesbitt, R-Lawton, offered a plan last week that goes back to a fully regulated market for electricity and maintains, but does not increase a mandate that utilities get 10% of their energy from renewable sources, like wind and solar. His plan also does away with mandates to increase energy efficiencies.

He said his plan puts an emphasis on ensuring a reliable electric supply by ending a program started in 2008 that allowed 10% of the electric customers in the state to leave the established big utilities and choose their own energy supply. That 10% cap was reached within a year from manufacturers, school districts and small businesses and 11,000 people and businesses are on a waiting list to get into that choice market.

“With several plants closing, it’s important to find ways to ensure Michigan residents aren’t left in the dark,” Nesbitt said Wednesday during a hearing of the House Energy Policy committee, noting that the state’s biggest electric utilities DTE Energy and Consumers Energy, will be closing nine coal-fired plants in the next two years.

Democrats aren’t opposed to a return to a fully regulated market, but want more attention given to increasing renewable energy standards and focus on energy efficiency initiatives.

“Renewables and energy optimization, those are the big issues for us from a clean energy standpoint. We’d like to see a 20% renewable standard by 2022,” said state Rep. Bill LaVoy, D-Monroe. “As well as looking at the definition of what is renewable energy. At first blush, is burning tires a renewable energy source? I don’t think so.”

Snyder is expected to land somewhere in the middle with his energy message on Friday.

“There are a lot of good ideas bouncing around out there and I’m going to put my message out and you’ll see there is a reasonable range of differences, but a lot in common,” Snyder told reporters this week. “I hope we can establish a strong energy policy for Michigan for the next decade of so.”

A task force on energy that Snyder established reported last year that the utilities could realistically increase the 10% standard and get nearly a third of their energy from renewable sources.

The GOP plan has drawn criticism from business organizations and some other Republicans who believe consumers should have more choice when selecting who supplies their energy.

“When you have 90% who are paying high, uncompetitive rates, and 10% who are paying competitive rates, it seems you ought to be going in the direction of the competitive rates,” said Rick Coy, spokesman for the Association of Businesses Advocating Tariff Equity, or ABATE, which represents some of the biggest manufacturers in the state.

He noted the main energy players benefitting from the plan are the big utilities like Consumers and DTE .

“The utilities have always wanted to go back to full monopolization,” he said. “If you had to compete or had a monopoly, which would rather have?

Mary Beth Rogers, the director of business services for the Clarkston Community Schools, told the House committee Wednesday that her district is saving $350,000 a year by working with a broker who finds cheaper energy sources for the district.

“As a school district with limited resources, we can’t afford to lose $350,000 a year,” she said. “If we had to go back to DTE, we’d have to cut five teachers in our district.”

The Michigan Schools Electric Cooperative sent a letter to Nesbitt saying that 324 school districts have saved $70 million since getting into the energy choice market.

The utilities, however, say they’re required to have excess electricity supply to ensure that customers don’t experience brown outs or blackouts during peak electricity usage times, like the hottest days in the summer.

“What’s happening is the market is tightening with these plant retirements. Our reserve margin is shrinking,” said Dan Bishop, spokesman for Consumers Energy. “And the problem is that customers still served by their traditional utilities are subsidizing the others in the choice market. It’s really a fairness issue.”

Consumers is shuttering seven coal-fired plants in the next year for two reasons: the age of the plants and the cost to bring them up to new environmental standards. They’ve purchased a natural gas plant in Jackson to replace some of the capacity they’re losing.

DTE Energy will close two plants by the end of next year and has purchased a natural gas plant in Carson City and has just put out requests for proposals to buy another one, said Scott Simons, spokesman for the utility. Ending the choice market will make reliability more certain, he said.

“When electric reserve margins hit below acceptable levels, we all become vulnerable to reliability risks and uncertainty,” he said. “Power plants need to be built and these retail energy marketers haven’t been planning for future customer energy needs.”

The bills received a first hearing Wednesday and aren’t expected to get voted on before the Legislature goes on it’s summer break in June.