In the last hours of its lame duck, the House finally approved a much-debated package of bills to update and enhance a comprehensive energy policy for Michigan moving forward. We applaud the effort to get this done.
Now that it’s all but law — Gov. Rick Snyder is expected to sign it after promoting it for a year and a half — the state can get on with the important work of securing reliable and affordable energy.
Energy is a major issue for Michigan and the nation. And although opponents of this legislation argued that under a new presidential administration the entire energy landscape could change, that’s not wholly true.
President-elect Donald Trump will no doubt change some of the regulations President Barack Obama has put into place regarding energy and the environment. But at this point, age and natural market forces are pushing energy demands toward natural gas and renewables more than government mandates are at this point. The state’s new plan works with those forces, regardless of who is in the White House.
Over the next 15 years the state’s total electricity generation will decrease by 30 percent as coal plants continue to come offline.
And over the next seven years, Michigan will lose more than 5,000 megawatts of generation due to aging facilities and regulations. 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.
This new legislation allows energy providers to plan for the future as it creates an Integrated Resource Plan for long-term power generation that focuses on a mix of natural gas, renewable energy and energy efficiency measures. It’s flexible enough to work with fluctuating natural gas prices, but structured enough to give investors a reliable path forward.
A major issue holding up the bills’ passage was the issue of electric choice. Several large manufacturers and school districts throughout the state have saved significant cash on power needs by being part of the 10 percent of Michigan customers currently allowed to use alternative providers.
They didn’t want to give that up, and other opponents wanted to see the choice program actually expanded. There’s currently a waiting list of about 11,000 to enter the program. But the state’s largest energy providers were concerned that they bear the infrastructure and maintenance costs for a grid that alternative providers simply tap into when they choose to.
The final legislation won over some original critics by instead of instilling an automatic fee on alternative providers, the Michigan Public Service Commission can determine if a capacity fee is necessary, how high it could rise or if it’s better for that supplier to secure capacity demands through an auction process.
The final legislation also requires Michigan utilities to buy or produce at least 15 percent of their energy from renewable sources by 2022. That shouldn’t be difficult, as the market is already encouraging use of sources like wind more efficiently than in the past.
Securing this plan was an important step for Michigan.