Lansing — Energy waste reduction is “absolutely key” to Michigan’s energy future, Agency for Energy executive director Valerie Brader said Monday, suggesting it would be a “shame” if legislators do not update state energy policy this year.
Brader and Michigan Public Service Commission chairwoman Sally Talberg on Monday presented results from two modeling programs indicating the state could have a relatively low-cost path toward compliance with the federal Clean Power Plan, should courts allow implementation of suspended carbon rule.
Spending constraints on energy waste reduction programs in current law produced the highest-cost scenarios for the state, according to Brader and Talberg, despite a mandate requiring utilities to achieve energy savings of one percent of their total annual electricity sales.
That’s because the mandate only applies if utilities spend less than 2 percent of their expenditures a year on efficiency programs, such as rebates for customers to upgrade lighting, appliances or insulation.
“We need to get rid of that limitation and we also need to make sure there isn’t a disincentive for our utilities to be able to continue to support the program, since continuing it is going to save money for all customers,” Brader said.
“Carbon rule or no carbon rule, this is the most important thing Michigan can do to control costs now and into the future.”
The ability to reduce energy waste is an important variable to consider as utilities replace aging coal-fired power plants, Brader said, noting the trend is expected to continue whether the federal carbon rule is implemented.
Energy legislation debate
Legislation now before the state Senate would scrap the 2 percent spending cap on efficiency programs and further incentivize utilities to reduce energy waste. It would eventually phase out the 1 percent efficiency mandate by 2021, replacing it with a new integrated resource planning process.
The Senate bills would establish a combined “goal” of meeting 35 percent of the state’s electric needs through renewable energy and waste reduction by 2025. It would not increase the current mandate of 10 percent renewables by 2015, which utilities have already met.
Gov. Rick Snyder’s administration is not opposed to energy mandates required in current law but does not think they are necessary to meet future goals, Brader said.
Dan Bishop, a spokesman for Consumers Energy in Jackson, said both the company and its customers are “very bullish” on energy efficiency programs.
Consumers has saved its customers more than $1 billion through energy efficiency programs since 2009, Bishop said, including $12 million in rebate checks or incentives given to schools.
He declined to weigh in on whether a continued efficiency mandate is necessary.
“It’s in place, and we see the programs continuing,” Bishop said.
Michigan Environmental Council policy director James Clift said the new modeling projections released Monday confirm that energy efficiency is “the cheapest, lowest-risk way to meet future (energy) demand.”
The environmental advocacy group agrees with incentivizing utilities to reduce energy waste but would prefer to see the Legislature leave the state’s efficiency mandate in place.
“Utilities are always going to have a split allegiance on something like this,” he said. “They’re in the business of selling electricity, so you have to make the financial case for why investing makes sense, and what we’ve found around the country is having a standard like this works very well.”
Clock ticking on reforms
While a general consensus seems to be building around energy waste reduction provisions, the fate of the larger policy overhaul package remains uncertain.
Several Republicans remain concerned with proposed rules that could restrict the state’s electric choice program, and Democrats want to see an increased renewable energy mandate as part of the final deal.
The Senate has just 17 tentatively scheduled meetings left on the calendar before the end of the year, when the current two-year session will end. Any bills that don’t reach the governor’s desk by that time would need to be reintroduced next year.
The Snyder administration last week announced it had developed a new plan with the Midcontinent Independent System Operator that could address reliability concerns related to the electric choice program, which allows 10 percent of the state’s electricity to come from alternative energy suppliers.
But the proposed solution, which would require approval from the Federal Energy Regulatory Commission, has prompted pushback from choice proponents.
A group of 14 House and Senate Republicans last week wrote MISO to protest the “proposed tariff language,” suggesting it would give the Public Service Commission authority that has not been granted by the state Legislature.
Brader briefed Senate Republicans on the new agreement last week in a closed-door meeting, but Senate Majority Leader Arlan Meekof, R-West Olive, said “there were more questions than there were answers” from his caucus.
“I think it would be irresponsible for this Legislature, this Senate, to vote on an energy bill without fully understanding the implications and interactions (of the legislation and new state agreement), said Sen. Mike Shirkey, R-Clarklake.
It’s expected to take several months for a decision from the Federal Energy Regulatory Commission, but Brader said she does not think legislators should not wait to act on the energy legislation, stressing the importance of the waste reduction provisions.
“It would be a real shame if we left something that is this beneficial for Michigan sitting on the table,” she said.