A year ago, Gov. Rick Snyder signed a pair of comprehensive, bipartisan energy bills that expanded the state’s clean energy standards and charted a new course for how various utility programs are overseen by state regulators.
Over the course of 2017, Michigan Public Service Commission staff led working groups on more than a dozen energy-related topics, from net metering for ratepayers who generate their own solar energy to the way utilities file long-term generation plans with the state. Essentially, the working groups made up of a variety of interest groups and utilities are putting the new laws into action.
Through 2018, utilities will file rate cases under this new framework, which is already generating opposition from utility critics. For example, independent power producers across the state are challenging the way the MPSC is setting “avoided costs,” or the amount utilities pay independent companies for their generation. A waste-to-energy facility in Kent County has been on the front lines of the fight throughout the year.
Observers expect this process to play out on other issues throughout 2018, particularly in changes to the state’s electric choice program. With the heavy legislative work completed in 2016, those interviewed about 2018 expect most of the action playing out with regulators.
“I frankly suspect it won’t be all that active of a year legislatively,” said Brandon Hofmeister, senior vice president of governmental regulatory and public affairs for Jackson-based Consumers Energy. “The big stuff at the state level will continue to be implementing the new energy laws at the MPSC.”
Hofmeister said Consumers is in the middle of unrolling a “clean and lean” generation strategy that depends more on renewable energy, natural gas and energy waste reduction following the closure of the utility’s “classic seven” coal units, including the B.C. Cobb plant in Muskegon. Consumers has five more units operating at its Campbell plant in West Olive and in Bay City, which at this point are scheduled to stay online until 2030.
“We’re really proud of the way we’ve approached the redevelopment and the efforts in those communities to replace economic activity and tax revenue those plants served for decades,” he said.
Solving key questions about the build-out of electric vehicle infrastructure — and who will pay for it — emerged as a statewide issue in 2017. In August, the MPSC and Michigan Agency for Energy convened a group to start looking at these questions after Consumers Energy withdrew its plans for a $15 million, ratepayer-funded pilot program.
Liesl Eichler Clark, president of the Michigan Energy Innovation Business Council, says a growing consensus among companies and ratepayer-interest groups is discussing how to build the infrastructure to spark more EV adoption and the role of regulated utilities and the private sector.
“We’re definitely going to come out of the gate and be robustly active on the electric vehicle infrastructure space,” she said.
The MEIBC recently brought together 19 companies and associations in a joint filing in the MPSC’s electric vehicle docket, Eichler Clark said.
“That’s a diverse group around some broad principles,” she said.
Hofmeister said the utility will likely pursue a pilot program in an upcoming rate case.
“(Utilities) are enabling a huge transition in the vehicle industry that will be cleaner and better for people. We want to push the envelope there,” he said.
BREAKING DOWN BARRIERS
More broadly, Eichler Clark said her group’s focus will continue to be on “reducing barriers” to acquiring clean energy. This includes supporting a pending bill that clarifies how residential solar installations are taxed, as well as being active in MPSC work groups on distributed generation, green-power pricing and integrated resource planning.
“We made a lot of progress this year,” Eichler Clark said. “The good news about this (clean energy) space is there’s always work to do. By no means do we have it all figured out.”
The Michigan Conservative Energy Forum, a clean energy advocacy group that includes a variety of politically conservative members, also is closely following proceedings at the MPSC.
“They’ve got their plate full,” Larry Ward, the Forum’s executive director, said of MPSC staff. “Like all work groups, it’s a slow, arduous process. Are they making progress? I think they are.”
The Forum plans to focus on one of its key principles to eliminate barriers for customers to generate their own electricity and get it into the market. How those ratepayers and companies are compensated by utilities for the excess electricity they send to the grid will be closely watched in the coming year, particularly as the cost of solar continues to decline.
At the national level, though, solar supporters express some anxiety about a pending trade case before President Trump that would impose tariffs on imported panels. The complaint was filed by Georgia-based Suniva — which also had a plant in Michigan — arguing that cheap panels made overseas are harming U.S. manufacturers.
However, some solar advocates say — at least in Michigan — the MPSC’s recent ruling on avoided costs paid by Consumers Energy could jumpstart the sector as smaller-scale solar projects could replace hydroelectric and biomass facilities that have historically been under avoided cost contracts.
However, critics say the MPSC’s recent order will close some hydro and biomass facilities in the state, which generate a form of baseload renewable energy. The Independent Power Producers Coalition of Michigan also plans to appeal the ruling.
Meanwhile, perhaps the most contentious energy-related issue in Michigan is Enbridge’s Line 5 pipeline through the Straits of Mackinac. Those interviewed for this story are not directly involved in the debate, but environmental groups are waging a major campaign to shut it down.
A coalition of businesses formed earlier this year are also calling for the pipeline to be shut down, while the Michigan Chamber of Commerce said this summer that the Great Lakes can be protected while the pipeline continues to operate.
“‘Shut Down Line 5’ may be a clever bumper sticker for environmental extremists and a handy slogan for politicians, but it ignores the facts,” Rich Studley, Michigan Chamber president and CEO, said in a statement in June following the release of a state-commissioned alternatives study. “To keep Michigan moving forward, environmental policy and important regulatory decisions must continue to be based on sound science, not bumper stickers or emotional political appeals.”
The Snyder administration recently announced an agreement with Enbridge to further study the potential of tunneling the pipeline beneath the Straits of Mackinac, among other provisions. Snyder is expected to make a decision on the future of Line 5 by August.
At the national level, advocates continue to monitor the declining costs of building renewable energy and how that is affected by low natural gas prices.
Even with a significant change in direction under the Trump administration — such as ending President Obama’s Clean Power Plan and a proposal to give financial support to struggling coal and nuclear plants for the baseload qualities — Hofmeister said Consumers would not be directly affected by the changes.
Offering financial support to coal and nuclear plants wouldn’t directly affect regulated assets like Consumers’, and the utility is “already well-positioned to comply with our share of Michigan’s (renewable energy) commitment,” he said.
Longer term, Consumers — like utilities across the country — is rethinking the traditional utility business model of building large, centralized, capital-intensive power plants that run on fossil fuels.
“Our view is very different,” he said. “Going forward, on the supply side of the electric business … we want to make sure we don’t overbuild and build modular in nature to avoid major capital expenditures. We’re very interested in how we can save our customers money by avoiding capital investments.”