Michigan energy overhaul lined up for lame-duck vote

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Supporters of a long-stalled and heavily lobbied plan to overhaul Michigan’s energy laws expect support from an influential business group to jump-start legislative action next month.

The Michigan Chamber of Commerce is endorsing the latest version of the energy package, CEO Rich Studley confirmed Tuesday, setting the stage for a Senate vote when legislators return to Lansing after the Nov. 8 election.

The Republican-led state Senate ended session last week without action on the revised proposal, but it is “the first thing we plan to vote on when we return,” spokeswoman Amber McCann said Thursday.

The modified legislation would raise the state’s renewable energy mandate from 10 percent to 15 percent by 2021, a change designed to win Democratic votes.

The Michigan Chamber, which holds significant sway with the GOP caucus, fought for new provisions making it easier for energy suppliers to offer alternatives when a utility is proposing to construct a new power plant.

Studley called the revised plan “a breakthrough” and expressed confidence it will not “kill” the state’s electric choice program, which allows 10 percent of the state’s electricity to come from alternative suppliers rather than traditional utilities.

Businesses and schools that participate in the choice program can save significant amounts of money, but critics continue to fear a proposed three-year capacity planning requirement will drive some alternative suppliers out of the market, leading to its eventual demise.

“We support this legislation because we’re confident it will sustain choice, improve reliability and would move the state forward in terms of energy policy,” Studley said in a Tuesday morning media roundtable that included sponsoring Republican Sens. Mike Nofs and John Proos.

The legislation would create a new Integrated Resource Plan process, requiring rate-regulated utilities such as DTE Energy and Consumers Energy to submit multi-year energy generation and waste reductions plans to the Public Service Commission.

The IRP process would guide decisions about the state’s future energy supply as utilities continue to retire aging coal power plants and consider replacements. Utilities proposing to build a plant that generates at least 225 megawatts of energy would have to go through a certificate of need 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 2030. Utilities would be offered new incentives for exceeding the state’s current 1 percent energy efficiency mandate, which would eventually be phased out.

“Instead of thinking of everything that might come down the pipe, we’d like to set up a system that would move with the future… whatever it might bring in the way of energy technology,” said Nofs, R-Battle Creek, about the IRP process. “You wouldn’t have to run back to the Legislature every time you want to do something new.”

The package would also encourage regulated utilities to create “demand response” programs giving customers the option to control their bills by using smart meters to avoid energy usage during times of peak demand.

“That energy rate break spreads out the peak demands, and when you spread out the peak demands you decrease the need for new generation” that can lead to customer rate increases, said Proos, R-St. Joseph.

Looking to lame duck

James Clift of the Michigan Environmental Council called the demand-response language one of the biggest remaining “defects” in the package because it would require opt-in by customers.

If consumers end up using more energy at lower-cost times, they should automatically realize savings whether or not they signed up for a program, he argued.

“There appears to be some progress being made” on the package, Clift said, but his environmental group continues to encourage more focus on rate-payer protections and energy efficiency.

Senate Minority Leader Jim Ananich, D-Flint, said last month Democrats would be likely to support the package if it included a 15 percent renewable mandate, which the new plan does.

Democrats “are reviewing the latest language before making their final decision on their support for this version,” said Ananich aide Tom Lenard.

State Sen. Mike Shirkey, a Clarklake Republican and strong proponent of electric choice, said Thursday he remains concerned the revised legislation could restrict the program.

“Each progressive draft of this bill that has come out has been improving,” Shirkey said, “but I still think there may be some gaps, not in intended outcomes, but in unintended outcomes that can be cleared up with more work.”

Should the legislation clear the Senate in a planned vote on Nov. 10, the Republican-led state House would have nine scheduled meeting days to consider the package before the two-year session ends in mid-December.

The lower chamber worked on its own energy plan last year but has largely sat on the sidelines in 2016. All 110 House seats are up for election next month, setting the stage for a potential power shift should Democrats manage to win a majority.

Studley urged legislative action in the lame-duck session regardless of which party wins control of the state House for the next two years.

“I cannot recommend to the next speaker of the House, whether that person is a Democrat or Republican, that we don’t make good use of what we have learned over the past 18 months,” he said.