The Building Tradesman Newspaper

Friday, December 25, 2015

Trades support made in Michigan strategy for power production

By Marty Mulcahy, Editor

LANSING - Over the past decade, the subject of regulating and de-regulating Michigan's power industry has never really gone away.

Passage of Public Act 295 in 2008 established the state's first renewable portfolio standard, requiring that Michigan's electric providers get 10 percent of their energy from renewable sources by the end of 2015 - a number that the state is meeting. That law also limited alternative energy suppliers to 10 percent of the electric market.

But with the clock winding down on that standard, state lawmakers this year have continued years-long arguments over replacement power deregulation and utility reforms - some of which could provide a major shock to the current system, as well as to the operations and employment for both the utility industry and the building trades.

Leaders of the respective state House and Senate committees where the legislation is being formed say a new standard was close in December, but not ready to present to Gov. Rick Snyder for his signature.

"This legislation could have an enormous impact on the building trades," said Patrick "Shorty" Gleason, legislative director of the Michigan Building and Construction Trades Council. "With the movement of coal power to renewable energy, our state is expected to see nine powerhouses shut down by April 2016, and as many as 25 shut down by 2022. For the utility workers and for our people doing maintenance and plant upgrades, just think about how many jobs that are being lost. This legislation, going forward, will at least help us and our utility partners when it comes time to bring new generation on line, and keep it in Michigan."

State House bills 4297 and 4298 have been debated in 2015, and would set a clean-energy goal - but not a formal standard - of 30 percent by 2025, through the use of renewable energies and energy efficiency. Utilities would get incentives based on the amount of efficiency they invest in. Deregulators are calling for eliminating that 10 percent requirement for alternative electric suppliers, opening up the market 100 percent to all energy providers.

After initially calling for an end to electric choice regulation, Aric Nesbitt, chair of the Michigan House Committee on Energy, said he wants to would keep the 10 percent cap on alternative suppliers participating in the program, but tighten rules for entering and leaving the alternative market.

DTE Energy Vice President of Business Planning and Development Irene Dimitry told MLive that the goal of 30 percent by 2025 is feasible for the utility to meet.

"We support it," she said. "We've been building renewable energy and supporting energy efficiency programs for quite a while now and we believe that both will be an important part of our portfolio to serve our customers going forward."

Major electrical utilities like DTE Energy and Consumers Energy have complained that completely deregulating the sale of electricity and allowing alternative electrical suppliers in Michigan is unfair to established companies like theirs. Deregulation allows other power providers, with no properties or infrastructure in Michigan, to come into our state and sell power for whatever price the market allows. Meanwhile, large local utilities are expected to keep the power flowing, and maintain their properties, buy coal and natural gas to burn, upgrade their facilities regularly for things like emission controls, and keep a staff on payroll.

"Deregulated markets provide strong disincentives for long-term investments in power plants necessary to ensure sufficient supplies to cover the wide swings in electricity demand," said David G. Mengebier, senior vice president of governmental and public affairs for Consumers Energy, in testimony before the Michigan House Energy and Technology Committee.

"States that have deregulated their markets continue to experience great difficulties attracting new generation investment because of the uncertainty their energy providers face in recovering their investments as customers come and go. Not only is this presenting major reliability challenges for these states, it is contributing to very high electricity prices - on average 25 percent higher than in regulated states.

The new legislation would require alternative energy suppliers to show they could supply sufficient generating capacity for a three-year period. Customers who want to change utility providers would have to provide a three-year advance notice. There are reportedly still differences between House and Senate energy plans that will be slated to be worked out in conferences early next year.

"This becomes a question of where we want our powerhouses," said Gleason. "Do we want them built, maintained and producing here in Michigan, or do we want them built and maintained out of state, with power coming to us over transmission lines?"

In supporting the legislation, Gleason pointed out that while building trades jobs have been lost because coal-burning plants are being shuttered, the trades are getting work through new, ongoing construction at natural-gas-fired plants in Holland and near Gaylord. Plus, there is solar and wind energy work that's taking place, too. "You deregulate utilities, you're likely going to lose a lot of that work to out-of-state providers," Gleason said. "I'll take made in Michigan anytime."