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Nofs looks to keep 10% choice cap, change renewable standards

April 27, 2015

Michigan companies wishing to switch their electricity service from a choice provider to a regulated utility would need to pay for whatever additional electric generation is needed to serve that company, under legislation being crafted in the Senate. 

The plan being prepared by Senate Energy and Technology Committee Chair Mike NOFS (R-Battle Creek) keeps Michigan’s unique 10 percent electric cap, but requires any company in that program or waiting to get into the program to agree to new parameters. 

One of those parameters is that if a choice customer wants to switch back, but DTE or Consumers Energy doesn’t have the capacity to serve that customer, that particular customer needs to pay the new electric generation costs. 

If anyone on the electric choice waiting list doesn’t want to get into the choice program at the time in which they are asked, they can say no, but they will be dropped from the waiting list, Nofs said. 

“I’m just trying to make it more fair,” said Nofs, adding that an incumbent utility’s customers shouldn’t be on the hook if a private company is flipping back and forth between an incumbent utility and a choice provider in search of the best rates, which tends to stick customers of the regulated utility with the costs. 

Nofs spoke with reporters today after a panel discussion in front of the Michigan Energy Innovation Business Council, where he shared the stage with Rep. Bill LAVOY (D-Monroe), the minority vice chair of the House Energy Policy Committee. 

Nofs said he received the first draft on his first bill from Legislative Service Bureau on Friday and will take the next two weeks to review the bills before giving it to his committee members and the participants of his 30-some member energy work group. 

Nofs said he envisions having his first public meetings on the plan in the first part of May. 

Like proposals from House Energy Policy Committee Chair Aric NESBITT (R-Lawton) and Gov. Rick SNYDER, Nofs’ bills will reform the state’s 2008 electricity law, which scaled back Michigan’s full choice program to one limited to 10 percent of the energy market. 

Nofs said he also is not interested in keeping or expanding the expiring renewable portfolio standards in which 10 percent of the state’s energy is supposed to come from renewable sources by this year, another product of the 2008 law. 

Instead, he’s looking at requiring the utilities to submit to the Michigan Public Service Commission (MPSC) an integrated resource plan (IRP) that sets clean emissions goals for its power plants five, 10 and 15 years out into the future. 

This approach gives the utilities the option to decide how it wants to provide “clean, reliable and affordable” energy without being restricted to a state mandate, Nofs said. If IRP doesn’t meet certain standards, which Nofs didn’t get into, the plan can be rejected by the MPSC. 

The plan is an expansion to the current IRP plan, where utilities come to the MPSC when they see an electricity generation need that must be addressed. The current process has worked, he said, noting Consumers Energy’s recent look into building a new power plant in Thetford Township. 

In that case, Consumers came to the MPSC with a plan, but during the public hearing process another company came to the table and offered the sale of its plant at a much cheaper rate than what a new construction would have cost. 

Everybody won in that situation — Nofs said — and he said he sees expanding the IRP process as a valid reform. The electric choice side has a different opinion on how that process works (See “Who Says We Need To Generate More Energy?” 4/15/15). 

On the process of customers being able to supply the electric grid with any excess power they generate through solar panels or private windmills, a process called “net metering,” Nofs said he supports having no cap on the amount of electricity that can be put into the grid. 

However, if the customer is getting to the point of paying nothing for their electricity, they should be required to pay to help keep up the electric transmission system, he said. 

Nofs’ plan is different than that introduced by Nesbitt, who is calling for a return to a fully regulated market with no choice program, legislation supported by Consumers and DTE. The Governor is calling on choice providers to provide the MPSC with plans showing they have the electric generation reserved to service their customers, but isn’t scraping the 10 percent cap. 

Neither Nesbitt nor the Governor are looking at extending the renewable portfolio standards, unlike Democrats who this week are expected to call for a 20 percent RPS by 2022. 

But Nofs’ idea of requiring utilities to submit an IRP with some emissions goals is believed to be a unique way to continue the push to cleaner energy. 

Doug JESTER of 5 Lakes Energy said based on what he heard of Nofs’ plan today it is not like the type of “cap and trade” system California and some northeastern states use, but does allow utilities to hit an emissions target without penalties for not hitting those goals. 

However, Jester said no penalties are currently connected with the 10 percent-by-2015 renewable portfolio standards, either, but the utilities look to be hitting those. 

“Even without penalties, Michigan utilities perform when given a standard,” Jester said. 

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