Expert: Mich. ‘would be dark’ without energy action

Jonathan Oosting
Detroit News Lansing Bureau

Lansing – What will Michigan look like 10 years from now if the state does not address potential energy capacity and reliability issues?

“It would be dark,” Sally Talberg, chair of the Michigan Public Service Commission, told legislators Wednesday in Lansing.

Talberg made the dire prediction before the Senate Energy Committee, which convened for a rare summer session to review the commission’s latest five-year outlook. It sets the stage for an expected intense fall debate over how to overhaul state energy regulations.

Lower Peninsula suppliers are not projected to generate enough energy next year to meet “reserve margin” requirements designed to ensure uninterrupted service in peak usage times, according to the July report.

Imports are available to make up the difference and provide a reserve cushion, and the new in-state projections are up from prior-year estimates.

But the regional market could further tighten by 2018, according to the commission report. If the scenario happens, “our ability to lean on the system, so to say, will go away, and that compromises reliability,” Talberg said.

Legislation sponsored by Sen. Mike Nofs, a Battle Creek Republican and chairman of the energy committee, would require Michigan utilities and other suppliers to prove annually they can meet the capacity needs of their customers.

Critics say the proposal would effectively kill the state’s electric choice program, which allows alternative suppliers to provide 10 percent of Michigan’s energy, typically at a lower cost. Alternative suppliers, who primarily serve business customers, could prove capacity through purchases at a three-year auction.

Companion legislation would phase out the state’s existing energy efficiency program by 2021 and would not increase a 10 percent renewable energy mandate that was met by 2015. Instead, the state would establish a “goal” of meeting 35 percent of its energy needs through energy waste reduction and renewable energy by 2025.

The package is backed by DTE Energy of Detroit and Consumers Energy of Jackson, who are seeking a stable framework as they retire aging coal-fired power plants and consider investing in replacements.

But a coalition of environmental, business and free-market groups have criticized the bills. Some Republicans oppose the electric choice restrictions, and Democrats have generally pushed for a greater emphasis on efficiency and renewable energy.

Prediction downplayed

State Sen. Mike Shirkey, R-Clarklake, downplayed the commission report during a Tuesday conference call with reporters, suggesting technical energy assessments are “ripe with people cherry picking pieces of information and then reframing them to advance their narrative.”

The five-year outlook noted that Michigan’s Lower Peninsula is not expected to fall short on minimum reliability standards “for the foreseeable future.”

Shirkey, an Energy Committee member who missed Wednesday’s meeting due to a “long-planned” family vacation, supports electric choice and opposes the new energy legislation, which he argues would lead to higher consumer costs.

“It’s not fully baked,” Shirkey said. The proposals “have an isolationist bent to them, and we don’t fully understand the implications, other than knowing it’s going to close options in a market where we know we have to make options as broad as possible.”

With less than 25 session days left this year, the energy debate may soon come to a head in Lansing. At least 145 registered lobbyists have officially weighed in on energy legislation or are registered to work for related interest groups, according to a recent Michigan Campaign Finance Network analysis.

Citizens for Michigan’s Energy Future, a utility-backed nonprofit, spent $7.4 million on television ads, mailers and other efforts in 2015 as it pushed for the energy policy overhaul.

The Senate legislation provides a “fair and sensible framework that requires all electric suppliers in our state to be accountable for the electric capacity needs of their customers,” DTE Energy said in a Wednesday statement.

Push for Senate action

Nofs said he’d like to see a Senate vote on the legislation before the November election, giving the House time for further consideration. Legislators return from summer break for two weeks of session in September and one week in October.

“If the temperature is right, I think we should pull the plug and take the vote,” Nofs said. “If not, we need to do some more educating and/or some more negotiating, then we can come back after the election and try to get it done in lame-duck.”

The electric choice language is “basically settled” and unlikely to change before a floor vote, said Nofs, who is continuing discussions with Democrats concerned about renewable energy provisions but said “nothing has come” from those talks so far.

Sen. David Knezek, a Dearborn Heights Democrat on the energy committee, said he thinks there is a “very clear path” toward a bipartisan energy overhaul package if majority Republicans are are willing to budge.

“I think we can provide Michigan utilities with all the reliability they need to provide service to customers while maintaining programs such as renewables, energy efficiency and solar that have worked so well in reducing the cost of energy for those same customers,” Knezek said. “Moving backwards now is a very short-sighted step in my opinion.”