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Net metering debate rages on in Senate panel

September 1, 2015

Questions over how proposed changes to the state’s net metering program would impact the state flew in a Senate panel Wednesday, with some senators expressing skepticism as to whether the current plan is fair for both Michigan solar users and utility companies.

SB 0438, sponsored by Sen. John PROOS (R-St. Joseph), increases the cap on how much energy solar users can submit to the grid from 1 percent to 10 percent and decreases program startup costs. However, participants would instead purchase energy from utilities at retail value and then earn benefits at the wholesale rate of the electricity.

Testifying before the Senate Energy and Technology Committee, representatives of DTE Energy, Consumers Energy and the Edison Electric Institute laid out their reasoning for supporting net metering reform. Currently, the plan is a subsidy for individual solar users who use and impact the grid daily, they said, and argued changing the system would create a fairer environment for all the other ratepayers not participating in net metering. 

But net metering supporters have raised loud opposition to the plan as it stands, and several senators debated the logistics of the current reform proposal on the table during today’s hearing. 

Sen. David KNEZEK (D-Dearborn Heights) used the example of collecting rainwater in his backyard to illustrate his views on the proposed net metering reform. 

“If I’m collecting that water . . . should I be first required to sell that back to an entity, only to purchase it back from them?” Knezek asked, later calling it an “issue of fairness” to allow solar collectors to use their own produced energy. “It’s a private investment — I should be able to benefit from that first and not be charged a retail rate from the utility.” 

Edison Electric Institute Vice President Edward COMER countered that Knezek’s hypothetical didn’t accurately represent the net metering process, because unlike net metering program participants, Knezek wouldn’t be selling his rainwater back to the utility. 

“The utility is forced to pay the customer for the power,” Comer said. “Under your example, for every gallon you collect in the rain barrel . . . the utility would have to pay you the equivalent of its rate.” 

Sen. Mike SHIRKEY(R-ClarkLake) said he agreed with the premise that the current net metering program “is very suspect and probably needs to be adjusted,” but questioned why utilities were so concerned about a miniscule cost. 

“We have no trouble charging customers $4 a month for energy optimization — what is the big angst about 1.4 pennies per month?” he asked, using a figure he’d calculated as what all ratepayers would pay based on Consumers’ total number of customers and the average savings per net metering customer. 

Nancy POPA, director of renewable energy for Consumers Energy, said that the main difference is the amount net metering program customers are saving on their bill — although there are few net metering participants, they are not paying 65 percent of their bill, while energy optimization participants are getting 1 percent knocked off their bill. 

The disparity of the subsidy will be greater as rates continue to increase, she said. 

“It’s not the total amount that’s the issue, it’s that a few customers are not being billed for the total cost of their power,” she said. 

Last week, net metering advocates laid out a potential alternative for senators on the committee, suggesting a minimum energy cost for net metering participants set by the Michigan Public Service Commission and based on the cost of electric service would likely take care of the problem.  

Popa acknowledged that there are other ways than what’s been proposed to get at the solution utilities desire and said Consumers would be supportive of a minimum bill plan if it actually covered all of the costs, which she pegged at roughly $65. 

Also discussed during the hearing was the state’s energy efficiency standard, which under SB 0438 would eventually be phased out. Proos’ bill also would specifically do away with the elimination of the renewable portfolio standard (RPS), which was enacted in 2008 and called for 10 percent renewable energy in Michigan by 2015. 

Martin KUSHLER, senior fellow with American Council for an Energy-Efficient Economy and former supervisor of evaluation at the Michigan Public Service Commission, said energy efficiency is one of the cheapest and successful forms of energy savings in the state. 

However, he said the effectiveness of that program would be slashed under the integrated resource planning (IRP) process currently outlined in the Senate proposal, because utilities would no longer be compelled to fund serious energy efficiency programs. 

“There were virtually no energy optimization savings prior to PA 295 passing — once that passed, energy savings ramped up dramatically,” he said, adding that cutting out energy efficiency standards would eliminate chances of reaching Gov. Rick SNYDER’s goals in that arena. 

Representatives of the Michigan Conservative Energy Forum — executive director Larry WARD, Christian Coalition of Michigan’s Keith den HOLLANDER and Crystal Mountain Resort Chairman and CEO Jim MacINNES — also opposed removal of state energy efficiency programs and other areas of the legislation, arguing SB 0438 is “not good enough” for businesses and ratepayers. 

Wednesday’s hearing was the latest in a series of committee meetings regarding the details of the Senate energy plan orchestrated by Committee Chair Mike NOFS(R-Battle Creek) and Proos. The meeting began at 10 a.m. and stretched well into the afternoon after a lunch recess.

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