Glenn Gilbert: Michigan energy policy needs to blend interests
Read it in The Oakland Press - 7/19/2013
The governor’s office has completed an exhaustive series of meetings throughout the state designed to seek input on a new energy policy.
It would be beneficial if Gov. Rick Snyder can replicate the bipartisanship demonstrated by the legislature and then Gov. Jennifer Granholm in 2008 when they enacted major energy legislation that has achieved its desired results.
Public Acts 286 and 295 did a number of commendable things. They established a 10 percent renewable energy portfolio for the state to be attained by 2015; it made the state’s giant electric utilities responsible for leading the way to that standard; and in return it modified the electric deregulation promulgated by PA 141 of 2000 by limiting electric choice to 10 percent of customers. with what is sometimes called a Retail Open Access cap.
Since all of these things have happened — or will occur — it is fitting that state government should look beyond 2015.
Three major groups are promoting one view or another.
Michigan Energy/Michigan Jobs is a coalition of business and environmental groups seeking to increase the state’s reliance on so-called renewable sources like wind and solar power.
The Customer Choice Coalition represents businesses seeking to restore the deregulation it feels was damaged by the 2008 law.
The Michigan Jobs and Energy Coalition speaks for major business groups like the utilities and chambers of commerce. It opposes raising the 10 percent cap on alternative energy suppliers.
As with so many issues, the truth resides in a mix of these interests.
Probably everyone agrees that electric rates are too high in Michigan and are hurting efforts to attract new jobs. But most people also would feel they are not willing to experience blackouts as the price for lower rates. Thus, reliability needs to join affordability in any desired outcome.
Last year, Michigan voters overwhelmingly rejected a constitutional amendment that would have imposed a 25 percent renewable standard by 2025. It doesn’t mean voters oppose alternative energy sources — they most certainly do not — but they thought it was inappropriate to write it into the state constitution. It was. Energy policy is the responsibility of the governor and legislature if they will do their jobs.
No one knows more about Michigan’s energy policy than Steven A. Transeth, a lawyer who is a former member of the state’s Public Service Commission, former 20-year legal counsel for the legislature and current director of energy policy for the Michigan Jobs and Energy Coalition.
There is no debate over the desirability of renewable energy sources and Transeth believes the 25 percent goal by 2025 is doable.
“Renewables are competitive or cheaper than new coal facilities,” Transeth said in a meeting with The Oakland Press Editorial Board. But he also said renewables are still highly subsidized and without such subsidies wind would be too expensive. He also calls wind “intermittent and unstable” as a source.
The incumbent utilities, Consumers and DTE Energy, must continue to lead the way if the renewable goal is to be achieved, Transeth said. The utilities say they have invested nearly $4 billion in the state since the 2008 law took effect, creating thousands of jobs. However, rates and bills have been subject to double-digit increases since then, though there is no discernible outrage among the public.
Transeth is more worried about the push to reinstitute deregulation or raise the 10 percent ROA cap.
“Electricity doesn’t lend itself to deregulation,” Transeth said. Utilities must make huge capital investment and guarantee service to everyone.
“The issue of reliability is huge,” he said.
Only 3 percent of electricity users in Michigan got their power from sources other than DTE and Consumers as the 2008 legislation was adopted.
“We never thought it would reach 10 percent,” Transeth said, but it did quickly in 2009 as the economy and wholesale rates collapsed.
Raising the cap would shift fixed costs to customers who remain with the utilities, according to the Michigan Jobs and Energy Coalition. Consumers Energy and DTE Energy estimate that increasing the cap to 25 percent would shift about $800 million in fixed costs to the remaining customers, primarily residential and small commercial and industrial customers.
At 10 percent, the ROA cap already has shifted about $330 million in fixed costs to the customers getting full service from Consumers Energy and DTE Energy, the utilities say, adding that only a relative handful of business customers would benefit at the expense of all the other customers.
Of course there is more than one side to this story, and taxpayers would be well advised to follow the debate in coming months. The governor is expected to unveil a plan in November.
Glenn Gilbert is executive editor of The Oakland Press. Contact him at firstname.lastname@example.org or 248-745-4587. Follow him on Twitter @glenngilbert2.
About the Michigan Jobs and Energy Coalition
Detroit Chamber opposes deregulation