DTE, Consumers Energy oppose lawmakers’ proposal to overturn parts of 2016 Michigan energy law

Published on March 04, 2020 by Chris Galford


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New legislative attempts to alter parts of the 2016 Michigan energy law has pitted the state’s utilities against solar and business advocacy groups who seek to eliminate caps on distributed generation and create a new system of pricing solar.

This concerns what’s called the Powering Michigan Forward bill package: Senate Bills 596, 597 and 598, submitted by state Sens. Tom Barrett (R-Charlotte), Ed McBroom (R-Vulcan) and Jeff Irwin (D-Ann Arbor), respectively. Pushing the bills is a drive to end the 1 percent cap Michigan currently sets on distributed generation, rebalance the pay scale for solar energy sold to the grid, and set up a system based on monthly netting of renewable energy.

Such goals are, in the views of the state’s largest utilities – DTE Energy and Consumers Energy – impractical and unaffordable.

At one of several hearings on the subject before the Michigan Senate Energy and Technology Committee, Brandon Hofmeister, senior vice president of Governmental, Regulatory and Public Affairs for Consumers Energy, testified that the bills would move the state back to a system that benefits some, but not all.

“Moving back to that old system of net metering, we think would not be the right thing for Michigan,” Hofmeister said. “It might promote clean energy, but it would do so at the cost of some of the other key pillars of the 2016 clean energy law. Namely, affordability and fairness in pricing, as well as potentially reliability.”

In part, this is because despite falling solar costs, scale still has to be factored in. And on those terms, reworking the laws to benefit solar companies or individuals might hurt those who rely on the grid as a whole. The utility system provides a number of resources on standby so it can be drawn from whenever customers desire. Private solar generation can help lower peak demand, according to Hofmeister, but most users still have to occasionally draw from power plants on the grid as a battery.

A small sampling of dates undertaken by Consumers, from June 11 to June 17, 2018, demonstrated that solar systems still relied on the power grid to meet energy needs throughout the day. Usually between 6 a.m. and 9 p.m. their generated power exceeded consumption, but that failed to cover the whole time they were drawing from the grid.

“Scale really matters when it comes to solar,” Hofmeister said. “Solar at rooftop-scale is about triple the cost of solar at utility-scale. Let me be clear: if a customer wants to invest in a solar system to serve their own needs, we want to enable that. But if they want to sell power back to the utility and essentially require all Michiganders to pay for that power as a public resource, that’s where we think the pricing should be competitive with other types of resources. This importance of scale is really one of the main reasons why we have the utility system in the first place.”

DTE, represented by Renze Hoeksema, vice president of Corporate and Government Affairs, echoed those sentiments. While noting that the cost of solar has dropped by more than 70 percent over the last decade, and that interest in solar is growing, he noted that his utility represents some 2.2 million customers. Adherents to rooftop solar, he said, perhaps make up a third of 1 percent of total energy generation in the state – thousands of people, but still comparatively small.

“We will not support policies that artificially support one type of generation and one group of customers at the expense of our broader customer base,” Hoeksema said. “In addition, the bills before you seek to undo years of extensive stakeholder collaboration that went into the development of the 2016 law.”

The bills’ creators and proponents argue that change is needed because the 1 percent cap will be reached within a matter of years in the Lower Peninsula, whereas in the Upper Peninsula, it’s as good as reached. Further, they testified that the existing laws have created an unpredictable environment locked into place by a tariff, which shortchanges solar participants and squeezes out benefits.

“More and more people want to invest in our energy solution going forward, but unfortunately, the legislature made it difficult to invest in that energy future even if it’s cheaper or more efficient to produce their energy at home,” Irwin told the committee.

According to McBroom, the laws have also made Michigan unique – and not for the better.

“Michigan is one of five states right now that still has this structure of capping this, despite having this other process we put in place in 2016,” McBroom said. “Forty-four states have net metering, five have distributed generation, and of those, we’re the only ones with a cap.”

Yet Hoeksema rebuffed such charges, noting that in areas where governments have attempted to be more generous to solar customers, a dramatic cost shift was the result. Hundreds of millions, to almost a billion, he claimed, forced states with much better solar capacity than Michigan to clamp down. Change comes with consequences, he warned.

Further, the DTE spokesman noted that the distributed generation tariff has not hindered solar participation at all.

“We now have the inflow-outflow rate established through the commission, and since the new DG tariff went into effect last year, more than 1,000 customers have applied to participate – this is actually an increase in participation, not a decrease to the trends we previously experienced under net metering,” Hoeksema said.

He also dismissed the dangers of the cap. Proponents of changing the law have argued that the distributed generation cap puts thousands of jobs at risk. While some on the committee noted that nothing in the existing law prevents those companies from continuing to put in solar systems, McBroom and solar companies testified that hitting the cap would allow people to continue to produce power, but without reimbursement. Some said that all interconnections would shutdown.

Hoeksema said that showed a lot of confusion about how the system works.

“Let me be clear, there is nothing in the current statute, or any statute, that prohibits a utility from connecting private solar customers once the 1 percent cap is reached,” Hoeksema said. “The cap does not prevent customers from having private solar. It simply limits the number of private solar customers that may receive a private subsidized rate.”

Rather, he and Hofmeister agreed, it would be unfair to over-compensate a select few for service. They said that they share the goal behind the new bills: to spur solar energy. Both utilities have established goals to reach net-zero carbon emissions. Both seek to retire coal-fired generating units and bring in more renewable sources. They are not, the pair agreed, anti-solar. What they cannot support are the way the bills seek to achieve solar’s expansion.