Things are heating up in the Michigan legislature as both the House and Senate are considering proposals to re-shape Michigan’s energy future. Unfortunately, the current proposals miss the mark on renewable energy and energy efficiency – both of which are widely recognized as important resources for meeting Governor Rick Snyder’s goals of adaptability, reliability, affordability and protection of the environment. As the conversations continue into the fall, will a leader emerge to ensure a strong commitment to a truly clean and sustainable energy future for the state?
Taking Michigan’s Energy Future in the Wrong Direction
Currently both the proposal before the House Energy Committee—introduced by Representative Aric Nesbitt (R)—and the proposal before the Senate Energy and Technology Committee—introduced by Senators John Proos (R) and Mike Nofs (R)—seek to sack the states successful renewable energy and energy efficiency standards. The Senate proposal eliminates the state’s renewable energy standard (RES), effective immediately, and phases out the energy optimization standard (EOS) in 2019.
The House proposal also eliminates the EOS in 2019, but takes a different—though equally effective—approach to wiping out the RES. Representative Nesbitt’s proposed legislation keeps the current 10 percent RES, but redefines “renewable energy” to make the standard all but moot. By allowing waste incineration, the unsustainable burning of Michigan’s forests and power from the state’s pumped storage facility (which is fed primarily with nuclear and fossil fuel energy) to count towards meeting the standard, Representative Nesbitt is essentially taking the “renewable” out of “renewable energy.”
No Substitute for Michigan’s Successful Standards for Renewables and Efficiency
In their place, both proposals would implement an integrated resource planning (IRP) process that requires state agencies and utilities to regularly develop and submit for approval comprehensive plans for meeting Michigan’s future energy demand. The main problem with this approach is that IRP processes are, by nature, utility-driven proceedings that tend to under-value non-traditional energy resources such as renewables and efficiency.
In essence, substituting the state’s renewable energy and energy efficiency standards with an IRP process takes simple, effective policies that provide certainty to utilities, investors, and consumers with a complex process fraught with uncertainty and contested regulatory proceedings. When implemented effectively, an IRP process can be a great complement to renewable energy and energy efficiency standards. But it cannot replace their simplicity, certainty and effectiveness.
The notion that energy efficiency would effectively compete with generation resources for space in the currently proposed IRP process is particularly misguided. Before Michigan enacted its energy efficiency standard, utilities were essentially making zero investments in energy efficiency. Research by the American Council for an Energy Efficient Economy has concluded that IRP processes are not nearly as effective at driving investments in cost-effective energy efficiency – states with efficiency standards are achieving more than three times the levels of efficiency as those states that rely solely on IRP.
It isn’t hard to understand why. The utilities that put forth proposals under the IRP process are in the business of selling electricity, not saving it. Regardless of what they might say in their testimony before the committees, the evidence simply doesn’t support the idea that utilities will voluntarily and aggressively develop the energy efficiency resource without a strong standard in place. Keeping Michigan’s energy efficiency standard to ensure continued investments in this important resource should be a no-brainer.
A Sensible (if Not Ambitious) Alternative
It should be noted that Minority Leadership in both the House and Senate have introduced legislation that would strengthen the state’s renewable energy standard to 20 percent by 2022 and require increased investments in energy efficiency to achieve 1.5 percent energy savings annually – an increase over the current standard that requires one percent annual savings. Both proposals are reasonable increases to the current standards that would continue the state’s momentum in developing a cleaner, more diverse and lower-risk electricity system, keeping Michigan on par with several other Midwestern states in developing these resources. Unfortunately, these legislative proposals have yet to gain traction.
Will Governor Snyder be a Clean Energy Leader?
A key factor in whether Michigan’s clean energy transition will accelerate or fizzle out is where Governor Snyder stands. To his credit, the Governor has called for the state to achieve up to 40 percent of its energy demand with renewable energy and energy efficiency. After more than a year of collecting and analyzing information, taking input from stakeholders and consulting with the Michigan Public Service Commission, the Snyder administration concluded that increasing levels of renewable energy and energy efficiency were the best path forward for achieving the energy goals he laid out of adaptability, affordability, reliability, and environmental protection.
But Governor Snyder has yet to weigh in publicly about the current debate over Michigan’s renewable energy and energy efficiency standards. If he’s serious about accomplishing his stated goals, now is the time to jump into the debate and provide some certainty to the renewable energy and energy efficiency industries that are ready to continue investing in Michigan. Michiganders need his leadership on clean energy now more than ever.
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