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Latest energy draft sparks stakeholder support, legislators still need wooing

October 26, 2016

Courtesy of MIRS News Service

Sen. Mike NOFS’s (R-Battle Creek) latest energy reform legislation is enjoying a warm reception from stakeholders and is on track to be the first bill the Senate takes up when the chamber returns to session Nov. 9, according to Senate Republican spokesperson Amber McCANN.

The Michigan Chamber of Commerce gave the opening signal Thursday in a memo circulated to senators. 

“Although this bill is not perfect, it is a fair and balanced compromise that addresses three key issues to our satisfaction: sustaining customer choice; competitive bidding; and improving reliability,” the floor memo reads. 

Rumors the Senate would take up the legislation flew Thursday morning, but Majority Leader Arlan MEEKHOF (R-West Olive) declined to take up the legislation so members had time to review it in detail. 

Nofs has been taking meetings over the last day and a half shopping the legislation to stakeholders. According to Nofs, the Small Business Association of Michigan has since given the legislation the thumbs up. Nofs said there are “many others” piling onto the support list and that he believes the support demonstrates the bills’ strength as “good public policy.” 

The state’s two largest utilities, DTE Energy and Consumers, also have signed off on the legislation. 

“The most important for us is reliability. It’s important for our customers and our state’s economic well-being,” said DTE spokesperson John AUSTERBERRY. “The bills preserve that and the concerns of other stakeholders. Sen. Nofs and Sen. Proos have worked hard to find common ground and that is reflective in the bill.” 

Some members of the legislature, however, won’t be so easily swayed. Sen. Mike SHIRKEY (R-Clark Lake) said he’s “cautiously optimistic” about the bills, but hasn’t been able to review the language itself, yet. 

“We have been told over the months, as this has evolved, that the problems had been addressed, only to find the problems weren’t addressed,” Shirkey said. 

Shirkey has carried the banner for two central issues in the energy reform debate: protecting customer choice and protecting competitive bidding for major generation investments. These two priorities were shared by the Chamber. 

“When they came out in support, my optimism meter improved, but my skepticism meter stayed right in the middle,” Shirkey said. 

Shirkey said he has amendments waiting in the wings should he feel problems around bidding and customer choice, but declined to share the specifics of those proposals until he has reviewed the legislation thoroughly. 

One reason is that the Energy Choice Now coalition lead by Executive Director Wayne KUIPERS is still opposed to SB 0437 on the basis that the legislation still slowly kills the state’s electric choice program, which limits choice to 10 percent of the state’s market. 

Kuipers estimates that a vote for the bill will transfer “tens of millions of dollars each year out of our schools and into the pockets of DTE and Consumers Energy Wall Street shareholders.” 

However, SB 0437 and SB 0438 could curry favor with Democrats, for the first time, with language that increases the state’s renewable portfolio standards from 10 percent to 15 percent by 2021. 

But the Michigan Conservative Energy Forum (MCEF) is concerned about language that will allow Renewable Energy Credits (RECs) could be purchased from other states, which they believe could “potentially destroy Michigan’s Independent Power Producers (IPPs) and make our energy capacity less reliable and less secure.” 

The bills also require power producers to sign six-year contracts, which could make the market more challenging for IPPs, and pay a “new and unfair” grid usage fee, which they don’t believe fairly reflects the cost of generation. 

House Minority Leader Sam SINGH (D-East Lansing) said he had been briefed on the legislation, generally, and believes it is “headed in the right direction” but there is still room to work on Democratic priorities. Singh said he met early in the summer with Democrats in the Senate to share the priorities it would take “to get House Democrats on board.” 

Those priorities include a higher renewable energy standard, increased energy efficiency and net metering that allows customers to generate their own energy through such means as solar power. Singh said he hopes to get those items worked into the Senate package before it moves over to the House. 

House Speaker Kevin COTTER (R-Mt. Pleasant) is reserving judgment on the bills until they come over from the Senate, said spokesperson Gideon D’ASSANDRO. 

Major changes to SB 0437 are as follows: 

– A utility building a new or adding onto an existing power plant generating 225 megawatts or more would go through a certificate of need process, lowering the threshold of 1,000 megawatts in the previous draft. The lower threshold is designed to loop in future natural gas — rather than coal-fired — plants that would have a lower output. Supporters say this change increases competitiveness in the energy market. 

– The new version drops the requirement to be granted automatic standing to alternative electric suppliers in a contested case before the Public Service Commission involving a new power plant from at least 500 megawatts to at least 200 megawatts. 

– Non-utility energy producers are given the opportunity to offer alternative proposals to the utility company generation projects set before the Michigan Public Service Commission (MPSC) to ensure that a project cannot be approved by the Public Service Commission unless it meets the “most reasonable and prudent standard.” Nofs said the addition of the word “most” creates a higher standard for proposed projects than other states.

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