Even though a pair of sweeping energy reform bills advanced in the state Senate late last month, key business groups stood opposed to the plans.
The reason: They say the legislation would stifle the competition needed to drive down rates as well as send a signal that Michigan is unwelcoming to emerging industries.
The members of a diverse collection of advocacy groups are each finding aspects they don’t like in Senate Bills 437 and 438. But the complexity of the bills reflect the complicated politics at play, and even within the business community there are differences over the best path forward.
Issues like Retail Open Access (known as “electric choice”) and access to renewable energy are front and center for businesses in this debate, which has been formally discussed in Lansing for more than a year now.
Given the broad scope of the legislation, “the challenge … is that it has a lot of pieces in it,” said Liesl Eichler Clark, president of the Michigan Energy Innovation Business Council. “On the flip side, there’s no question it also impacts the economy in a lot of different ways.”
The MEIBC’s members include renewable energy and clean-tech companies. Their top concern with the Senate bills is the potential for decreased investment in the renewable sector of the energy economy which, according to the Michigan Public Service Commission, has totaled about $3 billion since Public Act 295 was passed in 2008. The act created Michigan’s renewable energy and efficiency standard law.
Eichler Clark said more renewable energy development will not only add jobs, but also drive down the overall cost of energy through a diversified portfolio. A 40 percent standard — through a combination of renewables and efficiency — within the next 10 to 15 years is doable, she said.
“We’re still concerned about signals being sent in energy legislation,” she said. “I think an increased RPS sends the right signal to energy companies that investment in renewables is something that makes for a good hedge against future risk. Those are important features of the future grid.”
Additionally, the MEIBC has concerns about the ability of independent companies to develop energy projects. The 2008 legislation requires that renewable projects be developed 50/50 by utilities and independent producers.
“We continue to see those independent power producers put downward pressure on the cost of developing renewables,” she said. “We argue that while it’s a regulated market and we need to send the right signal to utilities, it’s also useful to be sure there are market-access opportunities for other companies.”
Outside of utility-scale renewables, though, the MEIBC is also pushing for lawmakers to preserve Michigan’s net metering law, which credits customers who generate their own solar energy on their bills, allowing them to pay off their initial investment over several years.
While Michigan’s nascent rooftop solar industry has yet to really take off, the cost of solar continues to decline and is looking more attractive. Although utilities support large-scale installations that they would develop, they are concerned an increasing number of ratepayers are not paying their fair share for grid costs and are getting subsidized by other, non-solar customers.
The extent to which that cross-subsidization is happening, though, has been the subject of debate across the country. The Senate energy proposal would modify the rates at which solar customers are reimbursed as well as add grid usage fees.
Meanwhile, the Grand Rapids and statewide chambers of commerce opposed the Senate bills that were voted out of committee in late May. While the bills maintain the 10-percent cap on choice — a policy the groups have supported for allowing businesses to shop around for cheaper electricity — opponents say the version would effectively kill electric choice through attrition and restrictions placed on suppliers and customers.
“We want to make sure we’re as competitive as possible on electricity prices,” said Jason Geer, director of energy and environmental policy with the Michigan Chamber of Commerce.
The chamber is also pushing to see more competitive bidding when it comes to building new capacity and fairer “cost of service” rates among customer classes. The Association of Businesses Advocating Tariff Equity (ABATE) also has opposed the Senate bills.
The varying degrees of opposition represent the complex influence energy has on the state’s economy. And as the grid changes, businesses are not only concerned about affordability and reliability, but also a steady supply of sustainable energy sources.
Case in point is Las Vegas-based Switch Ltd., which largely based its decision to develop a new data center and create a projected 1,000 jobs in the Grand Rapids area on whether Consumers Energy could provide 100 percent renewable energy to run the facility.
“Everyone has a different angle and is looking at it with their own unique perspective,” Eichler Clark said.
Geer said the state chamber hears “a very diverse message” from its members, which ranges from wanting to expand electric choice to eliminating it; from requiring energy efficiency spending to limiting it; and from those who want more renewable energy development to those who just want it available.
This interaction between reliability, affordability and now renewables, Eichler Clark said, “is the grid of the future and deciding what will get us there faster.”