Lawmakers, Snyder pivot to energy, Detroit schools

Gary Heinlein, and Chad Livengood

Lansing — Lawmakers and Gov. Rick Snyder have pivoted to try to make sweeping changes in state energy policy and craft a state financial rescue of the Detroit Public Schools by year’s end after cementing last week a five-year road funding plan.

The energy proposals have prompted battles between the state’s major utilities, environmentalists and consumer groups. Still, the House Energy Policy Committee accelerated the rush Thursday night toward new energy laws with a mostly bipartisan approval of a complex set of energy proposals that were quickly embraced by the Republican governor.

“This is a great step in the process, and I’m hopeful we can build upon the good work being done in both chambers to get this done by the end of the year,” Snyder said in a statement issued Friday.

The other big issue — a $715 million state rescue of the Detroit Public Schools — is encountering resistance from Republican leaders on the proposed money and reforms, while Democrats oppose a bailout unless power is taken from the state-appointed emergency manager and restored to Detroit’s elected school board.

Senate Majority Leader Arlan Meekhof, R-West Olive, wants to find a source for the money other than the School Aid Fund, which would be drained by $50 a pupil for each of Michigan’s 1.5 million students for the next decide under Snyder’s plan.

House Speaker Kevin Cotter, R-Mount Clemens, also isn’t displaying the same urgency as the governor to get a bailout deal done quickly. “We want to take our time and make sure we’re doing right by them,” Cotter spokesman Gideon D’Assandro said about the Detroit district.

There is more momentum for action on the energy proposals. A House vote on the energy legislation is unlikely this week because it’s too complicated for members to process in the two days of scheduled lawmaking bracketing Veterans Day, when the chambers don’t meet.

Energy Police Committee Chairman Aric Nesbitt, who is also the House majority floor leader, said he hopes for the chamber to take up the bills right after lawmakers return in early December from their traditional mid-November recess.

“I think it’s important to continue with the process because I do feel we need to get this done by the end of the year for a few different reasons,” said Nesbitt, R-Lawton. “The first reason is utilities are about to make some major investments for the next few years, and I believe there’s a more cost-effective way through an innovative resource plan and an all-of-the-above perspective to do those kinds of investments.”

The push for energy policy revisions comes as a coalition backed by the two major utilities is spending hundreds of thousands of dollars on broadcast advertising about pending federal environmental regulations they say would force nine older coal-fired generating plants to close in Michigan. Consumers Energy and DTE Energy have argued for preserving their power monopoly so they have a reliable customer base to warrant investments in new power plants.

Irene Dimity, DTE vice president of business planning and development, said the proposals moved out of committee are “a good step ... in terms of clean, reliable and efficient energy.

“We urge swift passage,” Dimity said. “These are key issue for the state of Michigan because we’ve got capacity shortages forecast as early as next summer, and it takes a long time to build new power plants.”

The bills include a goal, but not a mandate, for the state’s utilities to generate 30 percent of Michigan’s energy from efficiency measures and renewable energy sources, such as wind generation and solar, by 2025.

It dovetails with the vision Snyder laid out in a major March speech when he said 30-40 percent of Michigan’s future energy supply should come from alternate sources and reduced energy waste.

DTE and Consumers Energy must meet a requirement of creating 10 percent of their energy from renewable sources by the end of this year, but the mandate expires then as well.

The House package also requires that up to 10 percent of Michigan’s energy market be open to outside energy firms, leaving Consumers and DTE with a 90 percent monopoly. But the issue remains in controversy because of the proposal’s wording.

Rep. Gary Glenn, one of 25 committee members, cited reports by financial firm UBS Global that the new legislation “would effectively end retail open access, in other words, energy choice.”

Glenn, R-Midland, said large outside energy generator Exelon Corp. — which has contracts with school systems and companies in Michigan — agrees the bills would make it “challenging if not impossible” to continue offering competitive rates to its customers.

The free-market advocate unsuccessfully sought to empower the Michigan Public Service Commission — rather than state utility giants — with deciding what new energy capacity is needed and allowing competitors to bid for it.

He also failed with a proposed amendment to allow all Michigan K-12 schools and universities to buy their energy from companies other than Consumers and DTE if they can get lower prices. Forty percent of them currently get their power from non-Michigan utilities, saving millions of dollars, Glenn argues.

“I think this is completely up in the air,” he said. “I know there is widespread concern among (House) members who are not on the committee ... about the negative effect this is going to have, especially among the schools.”

There also could be a House floor battle over a proposal expanding the three-member Public Service Commission to five members, one of whom would be a consumer.

Current members all are utility experts. Expanding the committee may generate opposition from other regulated utilities, including the communications industry.

But Nesbitt expressed confidence his bill can pass. The package then would move to the Senate, where Energy Committee Chairman Mike Nofs, R-Battle Creek, has held dozens of hours of hearings on new energy policies he’s crafting.

“The House energy package was supported by a vast majority — two thirds — of the 25 committee members, Nesbitt said. “I feel that I’m somebody who tries continually to communicate with the rest of my caucus members for members to make sure that we’re passing good policy,” he added.