Editorial: Last call for energy bills
Donald Trump’s election won’t change Michigan’s future energy needs. The state House should not wait to see what happens in Washington and get about passing the comprehensive energy legislation that has been stuck in the Legislature for almost two years.
If the House doesn’t pass it when it returns to session next week, a new host of legislators will have to start over in January on shaping the state’s energy plans. That’s needlessly arduous and unwise for a state that has been retiring power plants due to old age and infrastructure and now must have new reserve power sources.
Opponents of Senate Bills 437 and 438 are arguing the uncertainty of how Trump’s administration will handle energy policy, specifically President Barack Obama’s Clean Power Plan, means Michigan can stall on passing energy legislation.
But the reasons this state needs a comprehensive plan for energy generation and distribution have little to nothing to do with a federal energy trajectory, whichever direction that might lead under President-elect Trump.
Michigan will lose more than 5,000 megawatts of generation due to aging facilities and regulations over the next seven years. 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.
Additionally, environmental regulations that have nothing to do with the Clean Power Plan are piling up on current plants. Pre-existing water, ozone and ambient air regulations make it necessary for these 60- to 70-year-old facilities to be taken offline. The alternative is to invest hundreds of millions of dollars into their refurbishing.
But even if Trump stops the Obama administration’s war on coal, as he’s promised, Michigan will continue to move away from that energy sources for financial reasons — natural gas is cheaper.
The legislation now sitting in the House would establish a statewide Integrated Resource Planning process for long-term power generation. The plan would ensure the state can meet demand as it transitions away from coal to a mix of natural gas, renewable energy and energy efficiency measures. The portfolio could fluctuate with market prices and availability.
The legislation would also preserve the 10 percent electric choice carve-out, and allow for competitive bidding for new assets being built to ensure the most prudent projects are being pursued for ratepayers.
Alternative providers would have to prove they can provide generation for three years or pay an undetermined “capacity charge” to utilities, which is fair to the 90 percent of Michigan customers who pay the fixed costs of grid infrastructure the alternative providers tap into.
Democrats in the Senate pushed for a renewable mandate and got it in this final bill version. Utilities would be required to produce 12.5 percent of electricity from renewable sources by 2019 and 15 percent by 2021. DTE Energy and Consumers Energy are already on track to do this, regardless of state or federal legislative mandates.
This legislation has been debated for two years, and all sides have had to compromise. It should be passed and sent to the governor.