Good Things Come to Those Who Wait?

by Bruce Goodman, Energy Lawyer

In May 2011, in front of 40 of Michigan’s top leaders in clean energy manufacturing, Governor Snyder presented the first Reinventing Michigan Award to Energetx Composites. Having waited impatiently for four months, this group of entrepreneurs (ready to unleash their economic gardening skills, resources, and innovation) asked the Governor for his energy policy. Answer: his energy policy would be forthcoming “in the fall”. In August, when Valerie Brader was named the state’s energy policy officer, Mike Finney stated “Energy concerns are at the center of our economic future, whether we are talking about its cost and availability or job creation and new business potential in green energy manufacturing.”  Then word went out that the Governor’s energy policy statement would be pushed to the first quarter of 2012. More waiting for those concerned about: RPS, standby rates, distributed energy, bioenergy, offshore wind, deregulation, customer choice, coal-fired generation, solar manufacturing, and advanced energy storage. The State of the State message last week yielded another setback: energy policy is being pushed off until “this fall”. Michigan has been treading water on energy policy for over a year. We are in a policy twilight zone. Elected officials need to hear from the clean energy manufacturing community now. Policy delayed is policy denied.

If I Ruled the World (or maybe just the State)

by Bruce Goodman, Energy Lawyer

Five elements to include in an energy policy for Michigan:

BIOMASS ENERGY: Make use of the energy in biomass that is going to waste in this state. The BTU content of the “unused biomass” in the state of Michigan is enormous. 

ENERGY EFFICIENCY/CONSERVATION: Make better use of our existing energy resources. Because our energy costs are so low, citizens and industry are not very aggressive in avoiding the “waste” of electricity and fuels. Increasing the price of energy (a carbon tax would be a start with a redistribution of the revenues to accomplish energy efficiency) is an option that deserves serious consideration.

DEREGULATION/CUSTOMER CHOICE ON ELECTRICITY: Reintroduce competition into the purchase and production of electricity. The deregulation of Michigan’s electric industry which was begun in 2000 was reversed in 2008. Just as competition in the telephone industry drove down prices and fostered innovation, the same competitive effect could drive Michigan’s electric industry.

ENCOURAGE ELECTRIC VEHICLES: Make electric cars work in Michigan. The state has placed a huge bet on the success of the electric vehicle industry; it is time to lead the nation in electric vehicle ownership. State government should fill its fleets with electric vehicles and the infrastructure for electric vehicles needs to be built out. Consider tax incentives for vehicle purchases.

BE A MODEL FOR RENEWABLE ENERGY: Made-in-Michigan renewable products and technology could lead the world. Michigan already is a leader in the solar energy field with Hemlock Semiconductor and  United Solar Ovonics; we need to demonstrate how this technology can be adapted for integration into buildings, the electric grid, and society. Similarly, Michigan has fledgling biofuels, biomass, wind, and geothermal industries and technologies that need to be strongly encouraged, whether with grants, tax incentives, or other assistance. To make Michigan a showcase for the implementation of these technologies, we need a larger renewable portfolio standard (from 10 percent to 25 percent) and the removal of barriers to self generation (i.e.  unreasonably high standby rates and unreasonably expensive interconnection charges).

These may not be the top five, but they deserve to be near the
top of the list.

State Senate Hearing to Evaluate RPS

by Bruce Goodman, Energy Lawyer  

State Senator Mike Nofs has commenced Energy and Technology Committee hearings on Public Act 295 of 2008. This statute, The Clean, Renewable, and Efficient Energy Act, set the renewable portfolio standard for Michigan at 10 percent by 2015. On October 4 testimony was presented by Consumers Energy, DSF Corporation, Michigan Electric Cooperative, Ventower Industries, Monroe Community College, Greater Gratiot Development Inc., Wind Resource, Dowding Industries, and 5 Lakes Energy. On October 11 testimony was heard from representatives of DTE, ITC, Michigan Electric and Gas Association, Dow Corning, Heritage Sustainable Energy, Great Lakes Renewable Energy Association, Northern Power Systems, Michigan Environmental Council, Energetx Composites, Michigan Clean Water Action, Citizens for Wind Energy, Waste Management, and Wind on the Wires. More hearings are scheduled.

Alternative Energy Report: A Bright Future for the Heartland

 by Bruce Goodman, Energy Lawyer

 A report by the Union of Concerned Scientists finds that if Midwestern states adopted strong clean energy policies, their citizens would pay less for electricity, see increased job opportunities, and have cleaner air. Each state has a fact sheet in the report, and Michigan’s fact sheet cites the state’s potential to generate twice the current energy demand for electricity from renewable generation—primarily wind and bioenergy (including co-firing existing coal plants with biomass). More specifically, the report recommends increasing Michigan’s renewable electricity requirement from ten percent to thirty percent by 2030, and setting the state’s energy efficiency standard at a two percent annual reduction in demand. In the report a “core policy case” is compared to an “alternative technology pathway” to show cost-saving, job-creation, and net-economic benefits.

Order Amends Renewable Energy Plan for Consumers Energy

by Bruce Goodman, Energy Lawyer

In its Case No. U-16543 Order dated May 10, the Michigan Public Service Commission (MPSC) responded to the request of Consumers Energy Company to amend its Act 295 Renewable Energy Plan (REP).  The MPSC’s rejected the company’s “lowest cost resource” strategy in favor of a “diversity of energy generation sources” plan.  Highlights from the testimony and Order:

• The company’s 100.8 MW Lake Winds™ Energy Park will be in service in the fourth quarter of 2012, will cost $2,300 per kW and will have a 20-year levelized cost of $95 MWh; 
• The company’s 150 MW Cross Winds™ Energy Park will be in service in 2014;
• In response to the MPSC staff’s position that the company should implement a 25 MW methane digester power purchase program at $83/MWh with 20-year contracts, the Order directs the company to conduct research and consider including a methane digester program in a future amended REP; 
• The Company was ordered to extend its Experimental Advanced Renewable Program (EARP) (pilot solar photovoltaic program) by adding: 
• Add at least 2 MW to the EARP program, divided between small (20 kW or less) and large systems (up to 150 kW); 
• Set the EARP firm offer price at a minimum of $0.20 and a maximum of $0.26 per kWh under contract terms between 12 and 20 years;

 No comment was made on the company’s reduction from the estimated 900 MW of renewable capacity in the original REP to a proposed 650 MW, a reduction justified on the basis of actual experience with higher capacity factors for wind energy resources than originally assumed.

Detroit Edison Makes Changes to Ownership and PPA

by Bruce Goodman, Energy Lawyer

 In its April 22 filing with the Michigan Public Service Commission (MPSC), The Detroit Edison Company revealed the size of the Gratiot County Wind LLC project has increased from 200 MW to 212.6 MW, and Detroit Edison has:

•           Increased its purchase of capacity and energy from the project from 100.4 MW to 110.4 MW; and

•           Increased its ownership interest at the site from 89.6 MW to 102.4 MW.

The pricing of the amended power purchase agreement (PPA) is not available for public inspection. The approval of these changes is being sought without a hearing under the ex parte approval request by the company.

Renewable Energy Annual Report has Surprises

by Bruce Goodman, Energy Lawyer

The first annual report to the Michigan legislature from the Michigan Public Service Commission (MPSC) on the impact of the 2008 Michigan Clean, Renewable, and Efficient Energy Act was filed on February 15. It found that progress toward the 10 percent renewable energy requirement is “going smoothly.” It listed all the power purchase agreements approved to date, and computed a weighted average price of $98.68/MWh, which is substantially less than originally forecasted in utility renewable energy plans. This market price is also well below the MPSC’s calculated levelized cost of $133/MWh for a new conventional coal-fired power facility. As predicted by the report, Consumers Energy has now filed an updated renewable energy plan in which it proposes lowering its renewable energy surcharge by $55 million, or approximately 72 percent, from $2.50 to $.70 per month.

Questions About Detroit Edison Requiring a Buyout Provision

by Bruce Goodman, Energy Lawyer

The November RFP posted by Detroit Edison for capacity, energy and renewable energy credits from renewable energy systems is intended to fulfill the company’s obligations under the 2008 RPS statute.  Curiously, each party responding to the RFP is being required to include in its proposal an option for Detroit Edison to “acquire, own, and operate the entire Project at anytime two or more years after the Commercial Operation Date.”  A number of questions come to mind.  Why this requirement?  How will the various proposed buyout provisions be evaluated in awarding PPAs?  Is this Detroit Edison’s method for having developers build its projects?  How does this requirement square with Section 33(1)(b) of the statute which states, “At least 50% of the renewable energy credits shall be from renewable energy contracts that do not require transfer of ownership of the applicable renewable energy system to the electric provider…”?  Is the company reading a “mandatory option” as something different from “requiring transfer of ownership”?  Will this requirement “chill” the types of proposals that will be received?  Is this what the legislature intended when it led the nation in giving utilities the right to develop half the generation required by the RPS?  The MPSC needs to consider getting and giving public answers to these questions.

Report Card on 2015 Renewable Energy Requirements

by Bruce Goodman, Energy Lawyer

Data released by the Michigan Public Service Commission (MPSC) shows that although only 3.63 percent of Michigan’s electricity was produced by renewable energy projects in 2009, the state’s electricity providers are on target to meet the 10 percent RPS requirement by the 2015 deadline. The measurement was made by comparing renewable energy credits to average retail sales. The report indicated:

• Consumers Energy has contracts for 396 MW of renewable energy: 8 MW already in commercial operation, with 388 MW more to be in commercial operation by the end of 2012.
• Detroit Edison has contracts for 252 MW of renewable energy: 44 MW already in commercial operation, with 208 MW more to be in commercial operation by the end of 2011.

Detroit Edison Seeks More Renewable Power

by Bruce Goodman, Energy Attorney

The Detroit Edison Company has issued a Request for Proposal (RFP) for 245 MW of renewable energy from wind, solar, hydro, biomass, geo-thermal, or landfill gas facilities. Approximately 120 MW of this amount will need to be operating by the end of 2012. A notice of intent to bid under the RFP is due January 21, 2011. Meanwhile, construction has commenced on the 200 MW wind farm in Gratiot County under the Detroit Edison twenty-year power purchase agreement with Invenergy Wind.