OpEd: Getting renewable energy policy in Michigan right

James Clift is policy director for the Michigan Environmental Council (MEC), a coalition of more than 70 environmental, conservation and faith-based groups across Michigan. The group formed in 1980 and is active in policy discussions in Lansing with both the legislature and the Snyder administration. Less known is its role in protecting residential electricity ratepayers before the Michigan Public Service Commission. James oversees MEC's ratepayer-protection program and has been active in policy discussions inside the state Capitol for more than twenty years.


The freedom to generate renewable energy

Energy is a hot topic in Lansing these days, and for good reason. 

Burning fossil fuels to generate electricity has a bigger environmental impact than any other industry; our nine oldest coal plants alone result in more than $1 billion annually in health care costs and damages in Michigan. And you only have to look at the annual price tag of $10 billion Michigan residents and businesses pay for electricity to see the energy sector's central importance to our overall economy. 

So the stakes are high for getting our energy policy right. And there's general consensus about what our overall goals should be. Virtually everyone agrees we should strive to keep costs down, minimize the risk of price spikes, protect public health and natural resources, encourage economic development within Michigan and maintain excellent reliability. How to accomplish those goals is where it gets tricky.

Weighing the advantages and disadvantages of various power sources, many people in the energy field have said we need an "all of the above" strategy. The Michigan Environmental Council supports that concept, with one important caveat: We need to change the process by which we make decisions about our energy future.

Under current law, such decisions are left mainly to large utilities that provide power for most Michigan residents. However, in many instances what is best for utility shareholders might not be what's best for Michigan residents. Relying on utilities to make these critical decisions for us will not result in the optimal plan. 

Another option would be for utilities to present their plan for meeting future demand to regulators at the Michigan Public Service Commission, triggering a robust public discussion on how well their plan meets the goals outlined above. Stakeholders would have the opportunity to suggest changes to the plan, with supporting documentation on how those changes would be in the best interest of Michigan residents. And ultimately, the MPSC would decide what is the "most reasonable and prudent" plan from the perspective of the people who pay the bills at the end of the day.

Through that improved process, we believe the MPSC would determine that continuing our transition to cleaner energy is a smart move for Michigan. The state began that transition with Public Act 295 of 2008 – legislation that has proven a huge success. Since its passage, our use of renewable energy has ramped up from 3.5% to 10% of the total energy used in the state, while the price for renewable energy dropped from 11 cents per kilowatt to less than 5 cents. And maybe more importantly, during a time of economic recession, more than $2 billion was invested in new renewable energy systems within the state.  

The 2008 law allowed utilities to build half of the new renewable power projects, but required them to purchase the rest from other companies. Now many Michiganders are asking if we should do more to encourage the growth of those smaller energy companies.

That's the question raised by a bi-partisan group of lawmakers in recently introduced legislation known as the "Energy Freedom" package. The focus of the bill package is on leveling the playing field for property owners who want to generate their own power. As the name implies, the package aims to enable individuals and communities to move forward on renewable energy systems by eliminating barriers from utilities. It includes bills on concepts like net metering, providing fair value for renewable energy, encouraging community energy gardens and authorizing microgrids.

The Energy Freedom package promotes further diversifying our energy mix by encouraging the development of small-scale systems to complement the larger, utility-scale projects that have so far dominated our renewable energy portfolio. 

Each approach has its merits. Utility-scale power projects provide lower prices for renewable energy. However, that price doesn't reflect the fact that distributed energy sources make our grid more efficient by helping to prevent "line loss" – energy that gets lost on the way to the customer. Setting the right balance between utility-scale and distributed renewable energy generation is important to Michigan's economic future. 

But at the end of the day, we think it should be up to the legislature, energy regulators and Michigan residents?not just big utility companies?to decide what's best for Michigan's energy future.