In a House Energy Policy Committee hearing on Wednesday, September 16, Representative Nesbitt introduced changes to certain parts of his energy legislation in order to align more closely with Senate legislation introduced earlier this year by Senators Nofs and Proos.
This is great news that signals two of the leading energy voices in Lansing are coming together on one unified vision for Michigan’s energy future. Below are the key points of what that cohesive vision looks like:
Senators Nofs and Proos and Representative Nesbitt agree that our state must move toward Integrated Resource Plans—which would give the state greater flexibility in planning for Michigan’s future energy needs. IRPs would require Michigan to outline 5-, 10-, and 15-year planning periods to integrate energy sources in ways that allow us to adapt to changing technologies, meet changing demand, and respond to a variety of other factors.
Underscoring the importance of flexibility, Representative Nesbitt said, “You hear the governor and Senator Nofs and myself saying you need an adaptable, affordable, reliable energy plan that’s there for the long term. There are always elements you need to reach in negotiation and getting the best deal for ratepayers…This is part of this transitioning to an all of the above resource plan…”
Fairness and Reliability
Senators Nofs and Proos and Representative Nesbitt agree that the inequalities and capacity problems created by partial deregulation need to be addressed.
Nesbitt Proposal: Tough but Fair on Deregulation
Representative Nesbitt’s legislative package originally included a provision to return the state to full regulation, prohibiting out-of-state energy providers from marketing to Michigan consumers.
Recognizing the need to honor commitments the state has previously made to consumers already participating in deregulation, Nesbitt introduced an amendment that would allow the state to retain the current 10 percent cap on deregulation, but put stronger controls in place to ensure reliability and fairness are protected.
Representative Nesbitt said, “I still believe going back to a fully regulated energy market is the most efficient and cost effective way of dealing with energy issues. But there are a number of different opinions out there. This is part of the legislative process to compromise a bit.”
His legislation would require out-of-state providers to guarantee capacity for their Michigan-based customers for a period of five years—two years longer than the Nofs-Proos legislation.
Nofs-Proos Proposal: Hold Out-of-State Providers Accountable
The Nofs-Proos bill similarly recognizes the need to treat consumers who are already participating in electric deregulation fairly by giving them the ability to stay with their current providers, while also addressing the capacity challenge by requiring alternative energy providers to prove their capacity can meet the needs of their Michigan customers for at least three years.
The approach from Senators Nofs and Proos, as well as from Representative Nesbitt, protects standard, regulated electricity consumers from price volatility and reliability issues by holding out-of-state energy providers accountable for capacity planning.
Both the Nofs-Proos proposal and the Nesbitt plan agree that while mandates have been useful in the past, they are creating an artificial market for renewables that is not sustainable in the long run, and that comprehensive planning is a better long-term approach.
Nesbitt Proposal: Freeze the 10 Percent Mandate
Representative Nesbitt proposes to maintain the renewables mandate at 10 percent and require that utilities file an IRP with the Michigan Public Service Commission every five years.
Additionally, Representative Nesbitt’s legislation would expand the definition of renewables to include a wider array of energy sources, such as hydroelectric pumped storage like the Ludington Dam, geothermal heat pump energy, steam production from renewable energy sources, and all waste or wood incineration.
Nofs-Proos Proposal: Phase out the 10 Percent Mandate
Senators Nofs’ and Proos’ plan proposes that once companies have met their goal of 10 percent renewable energy for three years, the mandate will disappear in favor of IRPs.
As mentioned above, IRPs would allow energy providers to diversify their energy sources in a flexible way. Specifically, the senate plan would include as clean energy sources all energy generation technologies that meet state and federal emissions standards or are carbon-neutral.
In a written statement on the subject, Nofs emphasized that IRPs would provide “a foundation for determining the best mix of resources to cost-effectively meet those [long-term energy] needs while also providing for prudent cost recovery.”
On the issue of efficiency, there is little, if any, difference between Representative Nesbitt’s recommended approach and the Nofs-Proos package.
Representative Nesbitt’s plan proposes ending the government mandate for electric companies to subsidize consumer efficiency plans. Instead, electric companies would be required to incorporate efficiency measures as part of their Integrated Resource Plans. The phaseout for the currently mandated programs would be January 1, 2019.
Meanwhile, a press release on the Nofs-Proos legislation emphasizes that efficiency will continue to be of “paramount importance” in his nearly identical plan to incorporate energy efficiency into each utility’s IRP.
Plans Still Evolving
As Representative Nesbitt and Senators Nofs and Proos continue to move their respective bills through committee and on to consideration by the full House and Senate, both proposals are likely to evolve even further.
It is encouraging to see how leaders from both chambers are beginning to walk similar paths and align their policies into one clear, cohesive vision for Michigan’s energy future. As always, we will continue to keep you posted on how the bills change through our What’s Up in Lansing series.
What do you want to know about legislation proposed by Senator Nofs and Representative Nesbitt? Send us your questions.