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Proposed Legislation Could Lead to Challenges for the Grid

Anyone who drives in Michigan knows failing to invest in our roads has left us with challenges. Failing to invest adequately in our energy infrastructure could have similar consequences.

If lawmakers in Lansing make the wrong policy decisions, it could weaken investment in Michigan’s grid. The misleadingly titled “Powering Michigan Forward” legislation could lead to fewer Michiganders paying their fair share for critical grid maintenance and improvements, forcing the majority of Michigan households to pick up the slack and pay more for the energy they need.

In Michigan, those kinds of challenges can be more than an inconvenience; they can put consumers and businesses at risk.

How the Legislation Depletes Grid Funding

The proposed bills give generous subsidies to a small segment of Michigan residents who can afford to install private solar panels on their homes and businesses. And everyone else ends up footing the bill.

This leaves fewer people helping to pay for the grid and critical infrastructure improvements that help maintain energy reliability and affordability—even though everyone is still using it.

Sound unfair? You bet! In fact, for this very reason, Louisiana recently ended its solar subsidy program. And Kentucky has hired an outside expert to help them redesign their private solar reimbursement structure to ensure “net metering customers…have more of a share in helping pay for the fixed costs of the grid so those costs aren’t passed down only to customers without rooftop solar.”

Major Study Confirms Solar Subsidies Threaten the Grid

In 2016, a Massachusetts Institute of Technology (MIT) Energy Initiative study advised policymakers to move away from the current system of rooftop solar subsidies, stating that they “threaten today’s electrical grid system by allowing solar customers to bypass grid maintenance costs.”

The study also described such subsidies as “wasteful” and “contributing to additional cost burdens on the poor.”

That’s one big reason Michigan’s 2016 energy law—and the Michigan Public Service Commission’s subsequent decision to reject our old net metering system and move toward a more equitable approach to private solar reimbursement—was so important.

Poor Policies Cost Consumers and Businesses

In fact, the outdated net metering policies that some lawmakers in Lansing are trying to revive through the Powering Michigan Forward legislation has been proven to lead to higher energy costs for homes and businesses.

In California, for example, energy consumers will pay an extra $1.1 billion annually for electricity by 2020 because of these policies.

New York has recently taken steps to reduce its net metering subsidies after analysis performed by a state working group identified cost shifts from solar owners using net metering to non-solar customers of between $3 per kilowatt (kW) per month and $7 per kW per month, depending on the utility and customer class.  That meant a typical 6kW solar rooftop system was shifting between $19 and $44 per month from each private solar customer to utility customers without private solar.[1]

These examples highlight another reason it was such an important step for Michigan lawmakers to move away from these policies that shift shared responsibilities (i.e., maintaining the grid) and increase costs onto those who can least afford it.

Michigan can’t afford to go back to a system that financially favors the few who can afford private solar over the many who cannot.

Private Solar Is Fine, but Shouldn’t Be the Foundation of Our Energy System

Let’s be clear: People who want private solar should have it.  More power to them (pun intended).  But the rest of Michigan shouldn’t have to pay for it—and our policymakers shouldn’t be putting forward legislation that favors private solar while undermining investment in the energy grid and driving up costs for the majority of consumers.

It’s also worth noting that failing to invest in our grid could slow the advancement of clean and renewable energy in our state, including universal solar and wind energy. Grid updates are essential to enable Michigan to integrate more solar and wind energy into our system efficiently. The sponsors of these bills say the legislation is motivated by concern for the environment, but many of the groups backing the bills are funded by private solar investors who stand to make a profit and are trying to use Michigan’s legislative process to help them gain market share.

The bottom line is, Michigan needs a well-funded energy grid that can keep up with demand––and the unpredictability of Mother Nature—not special interest legislation that puts reliability and affordability at risk.

 

[1] “Citing cost shifts, N.Y. regulators propose cuts to solar net metering,” Eric Lindeman, The Energy Daily, 16 December 2019