Michigan’s two major investor-owned utilities remain opposed to a series of bills that supporters say are needed to grow the state’s nascent solar industry.
Over the past month, the state Senate Energy and Technology Committee has taken testimony on three bills that include reinstating Michigan’s net metering program, which pays utility customers who self-generate power for the excess electricity sent back to the grid. The legislation would also lift the 1 percent cap on customers who can participate, and require the Michigan Public Service Commission to study the costs and benefits of solar.
Senate bills 596, 597 and 598 are sponsored by Sen. Tom Barrett, R-Potterville, Sen. Ed McBroom, R-Vulcan, and Sen. Jeff Irwin, D-Ann Arbor, respectively.
For more than a year, clean energy advocates and solar installers have battled with utilities over the rate at which customers are credited for power they send back to the grid. Under net metering, which is being phased out under 2016 energy reforms, customers are credited at the full retail rate of power, or about 15 cents per kilowatt hour.
Brandon Hofmeister, senior vice president of government, regulatory and public affairs at Jackson-based Consumers Energy, told the Senate committee late last month that it will operate under the net metering program through 2020. But the utility says power generation is cheaper when done on a large scale. Forcing the company to buy power at retail rates from net metering customers is more expensive and shifts costs to all other ratepayers.
Hofmeister added that the net metering program was created in 2008 when solar prices were much higher and was meant to help advance the industry.
“Now, 12 years later, thankfully solar prices have decreased dramatically,” Hofmeister told the committee. “Moving back to that old system of net metering would not be the right system. It might promote clean energy, but at the cost of … affordability, fairness and pricing, as well as potentially reliability.”
Consumers says it plans to offer its solar-generating customers two options in the future: credits at competitively bid prices for solar or wholesale market prices other energy providers get. Additionally, these market prices would fluctuate and include higher rates when the solar power is most valuable such as on hot summer days.
Detroit-based DTE Energy was the first Michigan utility to move from net metering to a new distributed generation program that uses an “inflow-outflow” methodology. The MPSC spent months setting rates for DTE’s program, which fall roughly in the middle of wholesale and retail rates.
Although DTE’s clean energy plan to reach net zero carbon emissions includes ramping up solar investments, “We will not support policies that artificially support one technology and one group of customers at the expense of our broader customer base,” Renze Hoeksema, DTE’s vice president of corporate and government affairs, said in written testimony.
However, solar installers and other advocates say this has created more uncertainty about recovering solar investments. They also argue that retail-rate credits are fairer based on the value of the power that’s sent back to the grid, often during times of high demand.
“We came together under the philosophy that if residents want to be part of the energy solution, we should invite them in,” Irwin said of the bills last month. “Maybe even more importantly, the way the tariff was developed creates a very unpredictable environment.”
Backers of the legislation include the Michigan Energy Innovation Business Council, the Great Lakes Renewable Energy Association and several solar installation companies.
Advocates also say lifting the cap on who can participate — set at 1 percent of a utility’s peak load — is necessary as solar costs decline.
The MPSC reported in December that the number of small-scale solar installations (the most common) enrolled in net metering increased 57 percent in 2018. A year ago, installations reached nearly 5,400, or 43.5 megawatts of capacity.
“For the first time in 12 years, I see our survival at risk with the cap on interconnection,” Mark Hagerty, president of Michigan Solar Solutions LLC, testified before the Senate Energy and Technology Committee on Feb. 11.
Hofmeister said the utility would still interconnect customer solar installations if the 1 percent cap is met, even though it’s not legally required. Advocates say the promise doesn’t add certainty beyond the cap.
Laura Sherman, president of the Michigan Energy Innovation Business Council, said meeting the cap is causing concern in the industry.
“These bills do not simply represent something that would be nice for the industry — Michigan’s solar installers are facing serious, real and imminent threats to their businesses, jobs and livelihoods,” Sherman said last month. “These bills address those threats.”