Michigan will lose nine coal plants over the next year; 25 coal-fired units will be retired in the next five years. Across the region, scores of coal facilities will go offline during that period.
Between the state’s aged energy infrastructure and the continual onslaught of federal environmental regulations, Michigan must decide now how it will meet its future energy needs. Bills have passed out of committee in the state House and are pending in the Senate to address energy policy for the next several decades. With an emphasis on long-term generation planning, goals for energy efficiency, and room for the market to help direct costs and the type of generation, these bills should meet Michigan’s goals.
The legislation would establish a statewide Integrated Resource Planning (IRP) process for long-term generation planning that would ultimately be compatible with President Barack Obama’s Clean Power Plan, if the federal mandate holds up against backlash from the states and in court.
Michigan can’t wait to see if Obama’s mandates stand or fall; it must move quickly to address a projected 1.8 gigawatt production shortfall by 2020. The legislation encourages generation from natural gas and renewables, as well as increased energy efficiency measures, to create a reasonable but diverse portfolio for Michigan.
The resource planning process in the bills is flexible enough to ensure Michigan can integrate the most cost-effective technologies at the right time to minimize cost to consumers. As the market for natural gas fluctuates, so would the state’s dependence.
The legislation also creates a goal, not a mandate, to achieve 30 percent of its energy from renewables and energy efficiency by 2025. Wind is the most common-sense renewable for the state; in this climate, solar is far too intermittent. Utilities are looking to further invest in turbines, but they take several years of planning.
The state is on track to meet its 10 percent renewable goal established in 2008. If it continues to meet efficiency improvements of about 1.5 percent every year, efficiency could very well make up a large chunk of the 30 percent target.
The legislation would maintain the current cap on electric choice at 10 percent of utilities’ load every year, but add new regulations to help ensure reliability. It would require utilities and unregulated suppliers to confirm they have enough power to serve customers for at least three years. Customers who choose alternate providers would also be required to give lengthy notice before switching back and forth.
Those ideas were critical parts of Gov. Rick Snyder’s 10-year energy plan for Michigan, and the governor has endorsed the legislation. Several legislators would like to see greater electric choice, and there’s a waiting list of people to switch from DTE Energy and Consumers Energy.
But the current hybrid model is the right path for the state, particularly as utilities will be investing heavily in new technologies to meet the Clean Air rules. They need to know upfront the fixed costs they’ll shoulder, and what predicted load and capacity needs. As the Obama administration continues to push for federal mandates on state energy policy, it’s critical Michigan chart a path forward on energy. This legislation does that.