The Building Tradesman Newspaper

Friday, January 06, 2017

State adopts new energy package that, surprisingly, is well-liked by everybody

By Marty Mulcahy, Editor

By Marty Mulcahy


LANSING - It took until the wee hours of the morning of the last legislative session of the year, but state lawmakers finally came up with a wide-ranging, bipartisan plan to update the blueprint for Michigan's energy policy.

With billions of dollars of Michigan-based utility maintenance and new construction work on the line, the building trades had a major stake in legislative passage of a utility-friendly policy - and Hardhats and many others in the state got a successful outcome with the Dec. 15 passage of the Michigan Comprehensive Energy Plan.

"This is a Christmas present for the trades," said Michigan Building and Construction Trades Council Legislative Director Patrick "Shorty" Gleason. "Coming to an agreement on a new energy standard is something a lot of our tradespeople aren't familiar with, but it's just a huge issue for us. There is work, right now at power plants, that has been in the pipeline, waiting for this new standard to pass. We haven't had many wins in the state Legislature in recent years, but this is certainly one."

In the end, compromises were made, and the legislation passed with bipartisan support.

*Perhaps the major concern of big utilities like DTE Energy and Consumers Energy in the reform debate was that more of their customers would be able to flee to alternative power providers. The state's big utilities were legitimately wondering why they should put more money into maintaining their power plants, or building new ones, when customers could flee to alternative, out-of-state energy suppliers who only sell - not produce - electricity.

*The utilities pushed hard to keep a cap on energy choice from increasing from the existing 10 percent, to 15 percent. Increasing that energy choice percentage was a major issue for a bloc of free-market Republican lawmakers in the House, but that number stayed at 10 percent with the new law. The Michigan-based utilities maintained it's not fair that if they need to build a plant or spend money on maintenance and upgrades to serve a certain number of customers, but those customers could leave at any time.

On the other hand, the utilities said if major customers who had left them all of a sudden decided to come back, there could easily be energy shortfalls, especially given the number of coal plants that have been retired in recent years.

*The new law retains the provision that allows 10 percent of Michigan energy customers to seek alternative providers, but added requirements that the alternative suppliers prove they have adequate resources to serve their customer load.

Part of the new state plan includes a tariff called a "prevailing state compensation mechanism" that alternative energy suppliers — in many cases brokers who don't produce their own electricity — would have to pay the utilities to help underwrite the cost of assuring Michigan has enough electricity to meet all customer needs. The tariff would only apply to alternative energy suppliers who couldn't show they were able to supply their electric choice customers through existing long-term contracts or through their own generation.

Building trades union leaders have been looking with concern at the maintenance and expansion jobs lost with the closure of numerous coal-burning plants in the state - Consumers Energy alone announced the shuttering of seven old coal-burning plants back in March. Entergy last month announced the 2018 closure of the Palisades Nuclear Power Plant in Covert. A state that would be seen as hostile to power plant new construction and maintenance would be a building trades job killer.

*The environmental lobby went along with the increase of the Michigan-based renewable energy standard from 10 percent to 15 percent, as well as an incentive provision for utilities to become more energy efficient. The new standard means that even more energy will be produced from sources like solar and wind.

"We now have a statewide energy policy that will save Michigan residents millions of dollars on their electric bills, alleviate concerns about having enough capacity to power the daily activities of 10 million people and find new ways to use our existing energy grid more efficiently," said Gov. Rick Snyder. "This policy also allows for more consumer choice in our growing market. The bills protect our environment by making it easier for Michigan to develop its own energy sources, instead of buying coal from various states. Our energy will be more affordable, more reliable and more green. This achievement continues sending the message that Michigan has a very bright future."

This energy package was one of the few pieces of major legislation that was adopted with all interested parties compromising and getting most of what they wanted.

“I would like to thank everyone for their hard work to protect Michigan ratepayers, support jobs for hardworking Michigan families and ensure clean, safe and reliable electricity into the future,” said state Sen. Mike Nofs (R-Battle Creek), chair of the Senate Energy and Technology Committee. “This package establishes a strong foundation for Michigan’s next-generation energy policy. This legislation is the culmination of several years of work. This package is not about what’s best for a few companies, organizations, or individuals, it’s about what’s best for the entire state of Michigan.”