by Bruce Goodman

New forms of distributed energy are one of the promises of renewable energy. There can be many smaller, even very small, electric generating stations dispersed throughout Michigan producing energy from local resources. It is the energy equivalent of buying local, and does not require transmission grid upgrades. But utility-imposed standby rates stand as an impediment. Ostensibly designed to compensate a utility for providing backup power to self generation, standby charges are too often structured to discourage distributed generation. These charges take away the economic incentive to build small energy centers. It is time to take the gloves off and either have reasonable standby rates or institute net metering for sources up to 5 MW. The MPSC can do the former; the Legislature must do the latter. Michigan’s energy future depends on it.

by Bruce Goodman

For many who have been in the energy practice since the PURPA days it seems like history is repeating itself. The Public Utilities Policy Act of 1978 had as its laudable goal the encouragement of renewable energy and energy efficiency. Small power production (renewable) projects and cogeneration (energy efficiency) projects were intended to make the nation more energy efficient and self sufficient. Just as now, ratepayers saw renewable energy and dispersed power as a way to save money while contributing to energy independence. However, progress was impeded by Michigan utilities who challenged the meaning of “avoided cost” and who imposed stifling standby rates. Today the utilities are again impeding the development of alternative energy and again are using purchase power rates and standby rates as two of their weapons. [Setting standby rates at a level that assumes all independent power on the grid will go down at the same time is not appropriate.  Notwithstanding a good start on the standby issue in the new net metering rules, except for very small projects standby remains a hurtle and an impediment.]  Unless the legislature aggressively addresses competitive pricing and standby rates, it may be déjà vu again in Michigan.

by Bruce Goodman

There is a disconnect in the public discourse on electric generation in Michigan.  It revolves around the confusion caused by such terms as “capacity”, “availability”, “energy”, “reliability”,  “intermittent”, “firm”, “spot market”, “backup”, “baseload”, “efficiency” and other energy jargon.  Energy policy cannot afford loose talk or loose thinking. The call for energy efficiency and alternative energy requires a better understanding of all these concepts. At the most basic level the public (and its leaders) needs to know that a comprehensive energy policy requires significant baseload capacity (MW) so that  alternative energy as we currently know it (MWh) can successfully contribute to energy security for citizens and businesses.  With an aging fleet of coal burning power plants, a manufacturing based economy, and a history of environmental protection Michigan needs the collective wisdom of economists, engineers, environmentalists, industry, business and politicians to achieve reliable and affordable power and a balanced energy portfolio (and capacity portfolio) of renewable energy, energy efficiency, and replacement baseload generation.