Michigan’s energy overhaul in jeopardy

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — A long-running push to overhaul Michigan energy policy is in jeopardy of stalling out during the final days of the lame-duck legislative session as House Republicans clash over free market principles and resist making broad concessions to win Democratic votes.

“I just can’t tell you at this point whether it gets done or not,” outgoing House Speaker Kevin Cotter, R-Mount Pleasant, told reporters this week.

With four full days left on the legislative calendar, Gov. Rick Snyder and top staff members set up shop in his Capitol office Wednesday afternoon to lobby for the energy package and other priority bills while Floor Leader Aric Nesbitt worked toward building a 56-vote coalition needed for passage.

“It’s still alive,” Snyder chief of staff Jarrod Agen said.

House Republicans remain divided over provisions critics fear could “kill” the state’s electric choice market, which allows alternative energy companies to serve up to 10 percent of the state’s supply at unregulated and typically cheaper rates.

Supporters of the legislation, including DTE Energy and Consumers Energy utilities, say the choice program puts Michigan’s energy network at risk because alternative suppliers do not help maintain the infrastructure they use or guarantee they have the capacity to serve their customers, primarily big businesses and schools.

The proposal, in combination with a separate plan awaiting federal review, would require alternative suppliers to prove their ability to meet their customers’ energy needs for three years or pay an annual charge to help the state meet federal capacity requirements.

Residential ratepayers and other utility customers are effectively subsidizing choice customers, said sponsoring Sen. Mike Nofs, R-Battle Creek. Alternative suppliers produce no electricity in Michigan, but if the state faces capacity shortfalls, it is traditional customers who would face blackouts first.

“The free market doesn’t work,” Nofs said, pointing to developments in Illinois, a deregulated state where the Legislature last week scrambled to approve a $235 million bailout to keep two nuclear power plants from closing.

Choice customers want the traditional energy system in place in case “the market goes crazy” and they want to “run back to the utilities,” Nofs said, referencing a significant price spike in 2008. “They want the system there. They want it up and running. That costs us a lot of money, but they don’t want to be charged anything to keep it running. That’s not fair.”

State Rep. Gary Glenn, a Midland Republican, said he was “astounded” by Nofs’ comments. He pointed to Ohio, another fully deregulated state where customers have reportedly saved $15 billion since 2011, according to an analysis by Ohio State University and Cleveland State University.

“If you’re looking for a reason this is not getting traction in the House Republican Caucus, it’s because it’s based on the premise the free market does not work,” Glenn said.

As aging coal plants are shuttered and others await planned closure, the legislation seeks to help Michigan map out its energy future by requiring utilities to go through an Integrated Resource Planning process when they propose to build new power plants or renewable energy installations.

To help secure Democratic support in the Senate, the Republican majority added a 15 percent renewable energy mandate to the package before a successful vote last month, building on the current 10 percent threshold DTE and Consumers have already met.

But Glenn and other opponents argue it does not make sense for the state to adopt a massive energy overhaul this year because federal policy could soon change dramatically under Republican President-elect Donald Trump, who has promised to roll back regulations enacted by the administration of Democratic President Barack Obama.

The Senate energy plan would lock Michigan into the “Granholm model of monopolies and mandates,” Glenn said. “There is no reason we should be doing this now. We’ve got to wait and work in partnership with the new Republican administration.”

While he conceded it will be a heavy lift, Cotter said he believes passing an energy package this year would be better than doing nothing. There are “very real issues” with energy capacity in Michigan, he said Tuesday, “but there’s broad disagreement on what a solution looks like.”

Facing a tight timeline, Republican leaders opted not to send the Senate-approved bills to committee for debate, limiting the opportunity for public input and causing heartburn for some legislators unfamiliar with details of the 234-page proposal now on the House floor.

GOP divisions mean Cotter and Nesbitt, who chairs the energy committee and is shepherding the Senate package in the House, will likely need significant Democratic votes to get the energy plan through the lower chamber.

Democrats have expressed interest in increasing the renewable energy portfolio standard above 15 percent. Cotter said he’s willing to compromise, but not on that front.

“I have a lot of consternation about the 15 percent RPS standard, so if it’s something that took us more in that direction, I would have a lot of reservations,” he said. “I could get a lot more excited about the package if the 15 percent were not there.”

Democrats are also questioning a proposed “equitable grid charge” for electric customers who participate in net metering programs, generating their own energy through solar panels or other renewable sources to add back into the grid.

“Net metering and home-based generation will just be snuffed out because of outrageous fees,” said Rep. Jeff Irwin, D-Ann Arbor. “I can’t vote for a bill that’s going to hurt our economy, kill jobs and slow our progress toward clean, independently generated energy.”