Ballot Initiative on Alternative Energy Planned

by Bruce Goodman, Energy Lawyer

A coalition of groups and companies is seeking to place a constitutional amendment before voters on November 3, 2012 to set Michigan’s energy policy. The proposed ballot language would require that by 2025 at least 25 percent of each electricity provider’s annual retail electricity sales be derived from clean renewable electric energy sources. The requirement would cover investor-owned, municipal-owned, and cooperative-owned electric utilities in the state. Petitions requesting that the initiative be placed on the November ballot must be filed by July 9, 2012, and must contain at least 322,609 valid signatures. Although the period during which signatures may be sought is 180 days, the petition must be filed at least 120 days before the election. The initiative requires a majority of the votes cast to go into effect.

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.

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.

Detroit Edison Files Renewable Energy Cost Reconciliation Case

by Bruce Goodman

On August 31, The Detroit Edison Company filed Case No. U-16356 with the Michigan Public Service Commission (MPSC) to reconcile its renewable energy costs with its approved plan. The filing consists of the testimony and exhibits of six witnesses. This annual proceeding is required by 2008 PA 295, the Michigan Clean, Renewable, and Efficient Energy Act. The filing seeks findings: • that the renewable cost reconciliation revenue recovery mechanism does not exceed the maximum retail rate impacts under the law; and • on the per mWh price for both renewable and advanced cleaner energy and capacity. The company reports it has a renewable energy capacity portfolio of 14 MW and that it has generated and/or purchased renewable energy, advanced cleaner energy, Renewable Energy Credits, Incentive Renewable Energy Credits and Advanced Cleaner Energy Credits in 2009 of 1,094,930. This includes generation from renewable and advanced cleaner energy fuels such as biodiesel, tall oil, wood chips and coke oven gas at Detroit Edison’s existing fossil-fueled plants.

Does/Will/Can Michigan have an Energy Policy?

by Bruce Goodman 

What does it take for a state (that is not California) to have an energy policy?  The question is timely because elections are approaching and one would hope the candidates would address all the important issues.  But will anyone take a public stand on unresolved energy issues: increasing the renewable portfolio standard percentage; new coal-fired generation; feed-in tariffs; standby rates; recommendations of the Great Lakes Wind Council or the Climate Action Council?  I suspect not.  Thus come January we are likely to continue with state energy policy “on the fly”, with a dash of gridlock and pinch of skepticism.  Let the Feds make the hard decisions on GHG regulation and renewable energy standards.  Term limits have done their job—left Michigan with a legislature with little institutional memory and little legislative expertise to address complicated issues such as energy.  Hey, how about energy platforms and energy debates in all the state races so that we can get these issues on the table.  Watt would be wrong with that?

Additions to DTE Energy’s Renewable Portfolio

by Bruce Goodman

DTE Energy is seeking Michigan Public Service Commission (MPSC) approval of two 20-year power purchase agreements and the associated renewable energy credits.  The weighted average price for the 3.2 MW landfill gas project in Orion and the 17 MW biomass project in L’Anse is $98.94/MWh.  This price is below the level assumed in the DTE Renewable Resource Plan.

Energy Supply Policy Does Not Have Free Lunch

by Bruce Goodman

Comprehensive energy supply policy needs to simultaneously address concerns about climate, energy security, and economic viability.  Anyone who advocates a program on a single issue needs to be viewed skeptically.  The wind does not blow nor the sun shine all the time.  There is no single answer – technical nor policywise – to all the problems and issues.  There needs to be a consensus that the free market does not appear to be ready to provide answers.  The government needs to kick start the problem-solving process with clear goals and simple programs.  Everyone needs to accept that the perfect energy supply policy will not spring automatically out of this process.  Energy prices will inevitably increase – there is no free lunch.  Even a long journey begins with but a single step.  That step must now be taken, both at the state and federal levels.

Either at the Table or on the Menu – MPSC Hearing

by Bruce Goodman

The Michigan Public Service Commission has announced it will hold a public hearing at 9 a.m. on June 22 for its proposed rules governing renewable energy plans and energy optimization plans. These rules may well set the tone and the future for energy projects in Michigan for the next decade.  Provisions include defining the “Michigan content” needed for a 10 percent REC bonus and how to compute RECs for pumped storage and mixed biofuel facilities. Part 2 of the proposed rules contain the details of how utilities are to implement their RPS plans, including rules on the five factors a utility may use to limit participation by bidders in RFP solicitations. Any person may submit written comments (reference Case No. U-15900) which must be received no later than 5 p.m. on July 14. See proposed rules at: http://efile.mpsc.state.mi.us/efile/docs/15900/0001.pdf