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Published in Energy

Editor's Notebook: Poking the utilities

BY Sunday, November 07, 2021 05:15pm

The state Legislature has been active in recent weeks on energy bills being championed by West Michigan lawmakers. 

One issue involves small-scale solar energy projects, while the other deals with the way large manufacturers could purchase power. “Community solar” and “electric choice” are quite different in nature, but share a common thread by drawing fierce opposition from the state’s two largest investor-owned utilities: Detroit-based DTE Energy and Jackson-based Consumers Energy.

It’s a familiar refrain that’s carried over in several previous legislative sessions.

Under House Bills 4715 and 4716 — sponsored by Reps. Rachel Hood, D-Grand Rapids, and Michele Hoitenga, R-Manton, respectively — subscribers would receive a monthly bill credit from their utility based on the amount of power they purchase from the solar project. Community solar projects could be built by for-profit or nonprofit entities and not exceed 5 megawatts (MW).

The legislation would “ensure that all customer classes have opportunities to participate as subscribers to a community solar facility,” according to bill language. The proposal also specifies opportunities for low-income households, and would prohibit utilities from penalizing customers who participate in a community solar project. Utilities would be allowed to recover costs for administering bill credits and for interconnecting the third party-owned projects to their power grid. 

Essentially, the proposal opens the floodgates for private solar development in which surrounding residents could invest directly into a project. A few publicly owned utilities in Michigan have dabbled in community solar projects. Consumers has been approved for 10 MW worth of pilot projects, but has so far built out 4.5 MW. 

Minnesota has arguably the nation’s best community solar law on the books. Over the past four years, more than 800 MW of community solar capacity has been built. The state’s large investor-owned utility, Xcel Energy, reported that $2.2 million in customer bill credits were issued in February 2018. The customer demand is now so great that hundreds of projects are currently waiting to connect to Xcel’s grid. The utility had 400 community solar project applications last year alone, according to Energy News Network

Some of the first community solar bills in Michigan date back to 2014, when Democrats and Republicans came together on an “energy freedom” package that sought to give utility customers more options to produce or procure their own power. Community solar legislation has come up in subsequent legislative sessions, all to die similar deaths in committee.

Indeed, DTE and Consumers have maintained a sharp lobbying focus on these House and Senate committees. In the most recent fundraising cycle, Consumers and DTE were the first and third-highest contributors, respectively, to the campaign committee of state Rep. Joe Bellino, R-Monroe, who currently chairs the House Energy Committee. The two utilities alone made up more than half of Bellino’s $17,000 in contributions reported this period.

Also last month, the two utilities held a rare joint press conference touting their voluntary renewable energy programs in which customers pay a premium for renewable energy credits. It’s not quite the same as subscribing directly to a local community solar project, as publicly owned utilities like Cherryland Electric Cooperative and the Lansing Board of Water and Light have done.

While utilities rightly say they can build large-scale solar projects much cheaper than a rooftop or small-scale community project would cost, they have yet to clearly define how much alleged cross-subsidization would occur if these projects were built. Utilities argue that being forced to interconnect these privately developed projects to their grid — and paying for the power — is a cost that all customers have to share. However, the Minnesota-based Institute for Local Self Reliance has noted that utility analyses often fail to account for the distribution value of solar or the potential of avoiding volatile natural gas prices.

Meanwhile, state Sen. Roger Victory, R-Hudsonville, last month announced a bill that rekindles an even older energy policy fight in Michigan: electric choice.

The legislation would allow eligible industrial power customers to purchase electricity from an alternative supplier regardless of the state’s existing 10 percent choice cap on a utility’s retail sales. The contract with an alternative supplier would have to span at least three years, and at least 80 percent of the customer’s load would have to come from largely in-state generation. The choice customer would also have to give at least five years of notice before returning back to full utility service.

The bill allows large power users to shop around for potentially cheaper electricity. It appears the bill’s introduction was driven at least in part by Ford Motor Co.’s decision to invest billions of dollars in manufacturing plants in Kentucky and Tennessee.

In statements to Michigan Radio last month, Consumers and DTE called Victory’s bill the “wrong path” and “unnecessary” for potentially jeopardizing reliability and increasing costs for ratepayers who don’t participate in electric choice.

If I were a betting man — and occasionally I am — I’d say these bills share a similar fate in the legislative graveyard that is the House and Senate energy committees. 

But as energy policy experts often note, Michigan adopts sweeping energy changes every eight years (see: 2000, 2008, 2016). In all likelihood, we’re seeing the buildup to a bigger, broader legislative debate in the 2023-2024 session that could involve other issues around advanced energy and clean transportation. 

For energy observers, it should be a fun few years.

Read 1201 times Last modified on Tuesday, 09 November 2021 13:29
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