Email Town Hall: Answering Your Michigan Energy Questions

The energy issues Michigan legislators need to resolve when they return to work after Labor Day are complex. The AMP community should understand what’s at stake and why we need to continue calling on Lansing to pass energy policy that addresses these and other issues.

Below we have provided answers to the top five questions you submitted.

Q: What are Michigan utility companies doing to go solar?

A: Local energy providers know that solar energy has a bright future in Michigan. That’s why they’re investing in large-scale solar projects in cities and towns across Michigan.

Large-scale renewable energy development has proven to be more economical and cost-efficient than single-family generation, such as rooftop solar installations on individual homes, and it ensures that all Michiganders can benefit from renewable energy.

Both DTE Energy and Consumers Energy have made great strides over the past few years to expand Michigan’s solar energy capacity by developing and delivering solar solutions that provide power for entire communities.

Q: How can we address the price spikes some consumers in the Upper Peninsula are experiencing?

A: The energy crisis in the Upper Peninsula, and the aftermath that continues to unfold, is a complicated matter to say the least. After the Presque Isle Power Plant lost its largest customer, its owner WE Energies of Wisconsin tried to close down the plant, threatening reliability and affordability for tens of thousands of Yoopers. Michiganders in the U.P. now face sever price spikes to keep the plant open and running, since the customer who departed Preque Isle for another energy provider consumed 75 percent of the energy generated by Presque Isla.

Neither having the plant close nor facing the cost to keep it open is a good option for the Michigan homes and businesses that rely on Presque Isle. The situation playing out in the U.P. is one very real example of what can happen when so-called electric choice consumers (the 10 percent of Michigan consumers participating in the partially deregulated electric market) have the ability to change providers without adequate notice. The ripple effects can be felt throughout the region and state, creating uncertainty and instability in our electricity market. The Nofs-Proos legislation would address this by requiring deregulated consumers to provide advance notice of their intention to change providers, as well as putting limits on their ability to hop from one provider to another, creating uncertainty for all remaining consumers.

The Upper Peninsula energy crisis also highlights the need to invest in local energy generation in the Upper Peninsula to make energy more efficient and cost-effective than rerouting energy from other states. The cost of transmitting energy – either from out of state or even from the Lower Peninsula – is less efficient and more costly for consumers than investing in local energy production. We need to shore up Michigan’s energy generation capacity statewide to ensure we aren’t overly dependent on energy from out of state at a time when most of the states in our region are seeing power plant closures.

Q: What’s the best way to plan for a more sustainable energy future?

A: There are many ways to integrate more sustainable, cleaner sources of energy. Lansing is debating two main approaches:

  1. Setting arbitrary mandates on renewables that local energy providers must meet regardless of costs, available technologies, or development timeframes.
  2. Establishing goals that allow local energy providers flexibility to adapt to the rapid changes occurring in technology and innovations in the clean energy space.

When the state’s renewable mandate was introduced in Michigan’s 2008 energy overhaul, it was important to help Michigan lower emissions, increase development of renewable energy sources then in their infancy, and get on track toward a cleaner energy future. A lot has changed since 2008.

Today, local energy providers have met or exceeded the 2008 law’s goals, and they certainly aren’t stopping there. Local energy providers are now the biggest investors in renewable energy in the state, and they are spearheading some of the most exciting innovations in renewable energy. Flexible goals will allow them to incorporate the newest, most innovative technologies and respond to changes in the marketplace without putting reliability at risk. This is critical to keeping our electricity affordable while local energy providers address the reliability challenges coming with the retirement of coal plants across the state.

Q: Do the Nofs-Proos energy bills prevent rooftop solar users from selling electricity back to local energy providers?

A: The Nofs-Proos legislation does not prevent rooftop solar users from selling their excess electricity back; it simply updates the rules under which they do so to ensure that all consumers are treated fairly. Currently, when rooftop solar users sell their excess power back via the grid, local energy providers must purchase it at retail rates. Retail electric rates include fees and surcharges consumers pay to help maintain the electric grid we all use. Reimbursing rooftop solar customers at the retail rate essentially means they aren’t paying these fees – even though they use the electric grid just like everyone else does (whether it’s to sell their excess power back or to purchase supplemental power when they aren’t producing enough for themselves). As a result, the fixed costs to maintain the electric grid are shifted to their neighbors. When our state’s rooftop solar program is fully subscribed, this represents a $6 million annual subsidy that the rest of customers in Michigan must pay.

The Nofs-Proos legislation would allow local energy providers to reimburse rooftop solar customers for their excess electricity at wholesale rates, ensuring they are paying their share to support the improvements and investments in our grid that benefit everyone.

Q: What is competitive bidding and how does it fit into the energy legislation being considered in Lansing?

A:  Some legislators – and many out-of-state interests – are calling for competitive bidding provisions to be included in whatever energy legislation Lansing ultimately passes. Competitive bidding would allow out-of-state energy companies to bid against local energy providers to build power plants here in Michigan. Local energy providers would then be mandated to purchase power from these out-of-state interests.

This is problematic for a number of reasons, not the least of which is the fact that it would undermine Michigan’s ability to remain firmly in control of its energy future. It would allow companies that have no vested interest in Michigan to build power generating units that they could shut down at any time (and they have before).

Additionally, promises of more reliability and lower rates have both been broken in the past. All of the power plants built by non-regulated energy companies in Michigan from 2000 – 2004 experienced some form of financial distress, bankruptcy, or were sold to regulated utilities. And the only other state to mandate purchase power agreements is California, which is one of the worst disaster stories out of many failed experiments with electric deregulation. Twenty-five percent of California’s energy now comes from out of state, exporting local jobs and investment while failing to lower rates for customers. Do we really want the same thing to happen in Michigan?

The fact is, out-of-state energy companies are already more than welcome to invest in and build power plants in Michigan – as long as they do it under the umbrella of Michigan’s regulated utility structure. Competitive bidding would cede authority over our electric infrastructure to out-of-state interests (and the federal government), leaving us vulnerable to entities not regulated by Michigan laws and focused more on cashing in on Michigan communities than investing in them.