It’s no secret Michigan is at an energy crossroads. Coal plants continue to come offline, and over the next 15 years that alone will reduce the state’s total electricity generation by 30 percent. Without proper planning, the likelihood that electric service to Michigan families and businesses will be interrupted continues to increase.
That’s why it’s critical the Legislature finally pass comprehensive energy legislation to create a framework that ensures reliable energy supply for the future.
The Legislature made progress last session on a bipartisan energy package that emphasized long-term generation planning, goals for energy efficiency and room for the market to direct costs and the type of generation. These bills — Senate Bills 437 and 438 — would meet Michigan’s needs.
If they don’t pass this session, the bills are dead and the process will have to start over after the first of the year.
Michigan will lose more than 5,000 megawatts of generation due to aging facilities and regulations over the next seven years. That means the state’s reserve margin — which ensures supply is reliable even in times of peak demand — will also decline. In just two years, the reserve will be below 15 percent, which is generally considered the danger zone by the Midcontinent Independent System Operator.
The state will begin importing electricity next year to provide a reserve cushion. According to the chair of the Michigan Public Service Commission, in-state projections are up from prior-year estimates.
That makes it all the more urgent the Legislature settle its differences on the energy legislation, which has been before lawmakers since last spring.
The bill package would establish a statewide Integrated Resource Planning process for long-term power generation that would ultimately be compatible with President Barack Obama’s Clean Power Plan. Electric utility companies are already essentially planning to comply with those regulations, but the IRP would cement the state’s generation planning, at a minimum.
The plan would ensure the state can meet demand as it transitions away from coal to a mix of natural gas, renewable energy and energy efficiency measures. The portfolio could fluctuate with market prices and availability.
It would also eliminate the 2008 Renewable Energy Mandate, which requires 10 percent of the state’s electricity generation to come from renewable sources or green technology credits. The new goal would be for the state to meet 35 percent of its energy needs through waste reduction and renewables by 2025, which it’s on track to do.
The legislation would also require alternate providers — or electric utility providers other than DTE Energy and Consumers Energy — to prove they have the capacity to meet generation requirements for the 10 percent of Michigan residents who have opted out of the traditional electricity market.
That’s down from the original proposal of three to five years, and shouldn’t be a heavy lift.
Electric choice advocates would like to see the 10 percent cap lifted, and alternate providers don’t want new requirements imposed on them for generation planning.
Greater electric choice is an admirable goal. But electricity planning, particularly with Michigan’s unique geography, doesn’t lend itself easily to a completely free market. The current cap makes sense for the short term and provides the best safeguards for all Michigan utility customers.
Lawmakers have a responsibility to find a version of the legislation that they can support, and pass it quickly.