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What Does Fairness Mean for Michigan’s Energy Policy?

Our legislators in Lansing must consider a number of factors as they as work to pass legislation to secure Michigan’s energy future

From a consumer perspective, one of the most important issues is fairness; our policies must ensure all Michiganders are treated fairly.  Legislation from Representative Nesbitt in the House and Senators Nofs and Proos in the Senate aims to do exactly that.

Electric Deregulation

One way both legislative proposals are helping to create a fairer, more equitable system for all Michiganders is by addressing the inherent unfairness caused by our partially deregulated electric structure.

Ending Cost Shifts

Electric deregulation in Michigan has meant that up to 10% of Michigan consumers can choose to leave local energy providers and purchase their power from an out-of-state provider.  As a result, ratepayers without this “choice” end up paying more to support our state’s electric infrastructure.

Why? Because out-of-state interests don’t invest in electric grid maintenance and improvements like local energy providers, so their Michigan customers are able to bypass the fees that customers of local energy providers pay to help maintain Michigan’s electric grid.  Ultimately, the cost of maintaining Michigan’s generation and transmission facilities and equipment shifts to only local utility customers despite the fact that all Michigan consumers use that infrastructure.

The Nofs-Proos proposal and Representative Nesbitt’s legislation would address this unfair cost shifting by setting better controls on out-of-state energy marketers and deregulated electric customers.  Holding out-of-state energy providers more accountable will help ensure everyone who uses Michigan’s grid also helps support, strengthen, and secure it.

Capacity Planning

Part of holding alternative energy providers accountable means ensuring they are able to meet the energy demands of their customers—both now and well into the future.  This is especially important because Michigan is facing a capacity shortfall in the coming years, and an insufficient energy supply will affect all consumers, regardless of who supplies their electricity. 

Both House and Senate energy energy packages address capacity planning by:

Renewables

Lawmakers must also figure out a way to continue incorporating renewables into Michigan’s energy portfolio in a way that does not give unfair advantages to some consumers over others, particularly when those who are disadvantaged by current policies are Michiganders who can least afford it. 

Cost Shifting

Consumers who choose to install rooftop solar panels, for example, currently participate in a billing structure called net metering.  Michigan’s local energy providers must, by law, purchase excess power from rooftop solar consumers at the retail rate, which is “often twice the wholesale price.”

According to the Wall Street Journal, “the retail rate includes transmission, delivery and grid maintenance costs. Solar customers who depend on the grid to obtain power at night and sell their excess generation during the day skirt these costs. In doing so, they shift the costs of supporting the grid to other customers who must then pay more.”

Senators Nofs and Proos propose changes to the program that would address the cost shifting that takes place under net metering, ensuring all consumers are treated fairly.

Flexible Planning vs. Government Mandates

Both Representative Nesbitt’s and Senators Nofs’ and Proos’ legislation would also seek to integrate greater use of renewable energy into our state’s energy mix by using Integrated Resource Plans (IRPs).  IRPs would allow the state greater flexibility to incorporate renewable energy, enabling us to adapt to new technologies with greater success—and greater fairness for all consumers. 

By using IRPs to help the state incorporate renewables in smarter ways, both the Nofs-Proos and Nesbitt plans would eliminate mandates at the state level that can conflict with, or are redundant to, federal regulations and often result in unnecessary cost increases that negatively impact Michigan businesses and households.

The Nofs-Proos and Nesbit plans would enable Michigan to focus on renewable solutions that benefit the most people in the most cost-effective ways without putting reliability and affordability at risk for some consumers.

Make Your Voice Heard

The bottom line is, Michigan’s next energy policy must address the inherent unfairness in our current policies.

In order to be a truly fair system, all electric consumers must pay their fair share to maintain the electric grid that serves all of us, regardless of where the power comes from. And all electric consumers must benefit from new technologies and new energy sources that will help make our electric system sustainable for the long term.

Tell Lansing that fairness in the energy market is critically important.