LANSING — Sweeping energy policy reform that has taken nearly two years to move through the state Legislature could face a contentious debate during the remaining days of the post-election lame duck session.
The dispute over Senate Bills 437 and 438 — versions that have made it the farthest through the Republican-controlled Legislature — is largely among business groups and Republicans who disagree over whether the legislation will raise rates on customers and disincentivize shopping for electricity on the open market.
Some major employers, business groups and lawmakers like Rep. Gary Glenn, R-Midland, are looking to block or seriously amend the bills before a House vote.
However, the bills passed the state Senate on Nov. 10 with bipartisan support. House Democratic Leader Tim Greimel of Auburn Hills also says his caucus is supporting the bills, calling it his “highest priority” when the House schedule resumes after Thanksgiving.
The Senate bills — sponsored by Sens. Mike Nofs, R-Battle Creek, and John Proos, R-St. Joseph — also increase the state’s Renewable Portfolio Standard to 15 percent by 2021 and lift caps on mandatory energy efficiency spending from utilities. Those provisions garnered support from Democrats and the Snyder administration, respectively.
It’s uncertain whether Glenn, who is vice chairman of the House Energy Policy Committee, will have enough votes to overcome support from both Democrats and Republicans.
Without significant changes, Glenn has said the bills would be “dead on arrival,” suggesting enough Republicans wouldn’t go along with a higher renewable mandate or limiting competition among energy suppliers. Glenn is also among a contingent of Republicans calling for energy work to be placed on hold following the election of Donald Trump, who many speculate could shift the course of federal energy policy.
“We’re talking about legislation that would lock in the Granholm model of monopolies and mandates at the very point in time when the Trump administration may relax federal regulations, including the possible drawback of carbon and mercury rules, which was the very premise to rewrite (Michigan’s) law in the first place,” Glenn told MiBiz.
State Rep. Aric Nesbitt, R-Lawton, who chairs the House Energy Policy Committee, could not be reached for comment. However, he told the Detroit News following the Senate vote that he’s confident the package would pass the House. Nesbitt also said he was “disappointed” in Glenn for thinking “he can speak for the caucus like that.”
Glenn noted that Nesbitt’s own energy package has stalled on the House floor since November 2015 because of a lack of support from within the Republican caucus.
While Glenn is open to amendments that would protect electric choice and remove barriers to solar energy development, “I see no indications that lobbyists and legislators have any intention of giving on either of those issues,” he added.
Greimel believes the bills that came out of the Senate “are in good shape.”
“We were happy to see improvement in the renewable energy standard in the bills, but even more importantly, we’re happy to see some meaningful regulatory framework in place around electric choice provisions to make sure people can’t just jump back and forth between the regulated and the choice market,” Greimel said. “If they’re going to jump back and forth, they have to pay their fair share to maintain generating capacity in the market.
“It’s a big improvement over the current arrangement.”
Moreover, Greimel believes the support from his caucus is enough to overcome opposition from House Republicans like Glenn. The House has nine session days scheduled during the rest of November and December.
“As long as the Republican caucus and House Speaker allow a vote on the bills, I believe there’s enough support to pass them,” Greimel said.
BUSINESS GROUPS DIVIDED
The legislation has the backing of major utilities DTE Energy and Consumers Energy, as well as the Michigan Chamber of Commerce, each of whom carry significant influence in Lansing.
In a Nov. 8 letter to its members, state Chamber of Commerce officials wrote that it successfully secured amendments to SB 437 to “ensure retail open access is sustained” for those who currently participate. The chamber also backs provisions for competitive bidding when building new electric generation and generally strengthening reliability in the market.
“As initially drafted, SB 437 was not acceptable,” the organization wrote in the letter. “However, through long and challenging negotiations, Chamber staff won numerous amendments that resulted in dramatic improvements from the version initially introduced and later voted out of Senate committee.”
The Snyder administration also supported the Senate-passed version of the bills.
“It was nice to see bipartisan support (in the Senate) and we look forward to and urge the House to take action and put this in place,” said Valerie Brader, director of the Michigan Agency for Energy. “We believe with those energy waste reduction changes (that remove limitations on utility spending on energy efficiency) that the bill will allow Michiganders to avoid billions in costs.”
However, businesses and their trade group representatives are divided over fundamental pieces of the bills, such as whether they will increase relatively high electric rates and kill the electric choice market by attrition through onerous fees.
A Grand Rapids Area Chamber of Commerce press release following the Senate’s vote called it “extremely disappointing.”
“Fundamentally, our main concern is that (SB 437) doesn’t adequately protect residents of Michigan and doesn’t promote competitive electric costs. It will raise costs for all customers and eliminates choice,” Joshua Lunger, director of government affairs for the GR Chamber, told MiBiz. “Our rates are the second-highest in the Midwest and the trend line is going in the wrong direction. This bill is only going to make that much worse.”
The Michigan Manufacturers Association, U.S. Steel, Amway Corp. and Pfizer Inc. also offered rebukes to the Senate bills.
Lunger said one key issue his organization opposes would allow utilities to seek reimbursement from the Michigan Public Service Commission for reasons beyond energy efficiency.
“It makes sense when you talk about energy efficiency, telling a utility that they need to sell less electricity and allowing them to make up for the shortfall,” he said. “But the language says they can seek it for other reasons and it doesn’t stipulate what that means. That doesn’t sit well with us.”
Additionally, SB 437 “includes lots of other costs that don’t need to be in there” for customers who get electricity from alternative suppliers, Lunger said. “That will fundamentally kill choice. Why would you pay for a program that’s more expensive?”