Michigan Chamber: Senate energy bill supports customer choice and competition

This letter is in response to the guest commentary from the Mackinac Center for Public Policy regarding energy legislation that appeared in Bridge on October 25, 2016.

The mission of the Michigan Chamber is to promote conditions favorable to job creation and business success in Michigan. As a statewide business organization with 6,700 members that employ over one million Michigan residents, our advocacy team is in the Capitol Building fighting for free enterprise and standing up for Michigan’s job providers every day state lawmakers are in session.

As you might imagine, we strongly agree with the Mackinac Center about the importance of free enterprise. Our friends in Midland are at their best when they conduct timely and original policy research on important economic issues. Unfortunately, the October 25th opinion piece on energy legislation current pending before the Michigan Senate was not up to their usual high standards. Much of the Mackinac Center’s commentary was either out of date or inaccurate.

For example, in an effort to cast Senate Bill 437 (sponsored by Mike Nofs) in a negative light, the October 25th column highlights an outdated 2015 discussion of House energy legislation that is not under consideration in the Michigan Senate. The Mackinac Center criticism of Senate Bill 437 also refers to a 2013 poll that showed “Michigan residents supported electricity choice.” Who conducted the poll? Who was surveyed? What was the methodology? And how does a three-year-old poll relate to the new and improved version of Senate Bill 437 now on the Senate calendar in November 2016?

As former U.S. Sen. Daniel Patrick Moynihan once said, “Everyone is entitled to his own opinion, but not his own facts.” Here are some key facts regarding Senate Bill 437. The latest version of the bill is substantially different than the bill that was reported out of committee months ago. In 2007 there was a concerted effort in the state House to eliminate customer choice and return Michigan’s electricity market to total state regulation. The Michigan Chamber opposed that effort and led the fight to retain customer choice. The 2007 battle over customer choice and competition eventually resulted in passage of legislation that became the 2008 state energy law still in effect today.

So let’s be clear: For the past nine years, the Michigan Chamber has supported customer choice and competition. If Senate Bill 437 “would end electricity choice” as the Mackinac Center claimed, we would oppose the bill. As a direct result of lengthy negotiations that took place over the past few weeks, Senate Bill 437 has now been dramatically rewritten and substantially improved. Amendments the chamber fought for and won in these negotiations will sustain customer choice; provide for effective competitive bidding, and improve reliability.

Senate Bill 437 will put Michigan in control of our energy future while allowing customers using Alternative Energy Suppliers (AESs) to grow – even if that growth exceeds the current 10 percent cap. Senate Bill 437 also now guarantees a competitive process for new power plants and renewable energy – ensuring Michigan’s businesses and families get the affordable and reliable energy they deserve.

Now is the time for lawmakers to revise and update Michigan’s 2008 energy law to reflect changes in state and federal regulations, changes in the energy marketplace and changes in technology. We should not allow Michigan to become overly dependent on other states to supply the power our families and businesses need.

Doing nothing is not an option. After months and months of committee meetings and public hearings in both the state House and Senate, it is time for lawmakers on both sides of the aisle to come together after the November general election to pass fair and balanced energy legislation to move Michigan forward.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

About The Author

Rich Studley

A guest author for Bridge Magazine.

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Comments

SAm
Wed, 11/09/2016 - 12:19pm
Where does the family go for electric connections.Ohio is calling..,or get my own generator?
Mary M.
Wed, 11/09/2016 - 12:35pm
You would think that the entity known as the 'Michigan Chamber of Commerce' as well as its Chief Executive Officer, Rich Studley would stand fully behind and greatly support the idea of "commerce" being fully free and openly competitively exercised for homeowners, businesses as well as schools alike. Then again... maybe not to Rich Studley of the Michigan Chamber of Commerce, when he writes an article such as this. Both of the packages of bills on electric energy monopolization introduced by Senator Mike Nofs and Rep. Aric Nesbitt should be killed in their committees ... and, never to see the light of day again. It is long past due that the peoples right of Electricity Choice and fair and open competition be allowed to be openly practiced in the State of Michigan. This sovereign nation was founded on the ideal of an open and Free Market society. Nothing less is government despotism.
Wed, 11/09/2016 - 3:24pm
Nice try Rich Studley {president and CEO of the Michigan Chamber of Commerce} But its evident you are paid for by businesses not Michigan Citizens The below copied analysis also points out what you say isn't true which tells me you must be a Republican in Governor Nerds Pocket. It also points out that enough smart meters have been deployed across the state for Michigan to move to time-of-use pricing. A recent report said that a ComEd program in Illinois for time-of-use pricing has saved 10,700 customers $15 million since 2007. Shame on you Studs - you must think we are stupid? You seem intimately comfortable with spewing carefully crafted half truths that continue to support a monopoly on electrical energy for the TWO BIg Money Grubbing Michigan energy companies - namely DTE and Consumers Power. DTE and Consumers Power are all about pilfering profits in any way they can and in this case taking money from Michigan Citizens especially without regard for those that can't afford it. Fixed income Veterans, the Handicapped and Retirees need the fair opportunity to purchase electricity from alternate sources just like they can on Natural Gas to heat their home with. The 10% Maximum on electricity is a contrived joke and reasonably should be expanded to infinity just like the natural gas for heating choice is now. Then if one tries to become a customer in that 10% electrical choice each alternate choice electric company contacted says that they are not State Approved to serve residential only commercial. So the energy giants have that blocked today as well as tomorrow in my opinion. So citizens read on about the bills that have been reworded but equate to the same bottom line - can you spell MONOPOLY. http://midwestenergynews.com/2016/05/05/revised-energy-bill-would-still-... Or see the below copy from the Midwestern Energy New Organization, Michigan Senate Republicans spent the past six months revising a comprehensive energy policy proposal that brought fierce opposition from interest groups over electric choice, renewable energy and energy efficiency. Opponents said the initial bills — SB 437 and 438 — generally favored the major investor-owned utilities, which backed the proposal. Based on reaction since last week, much of that opposition remains. Republican Sens. Mike Nofs and John Proos, who chair and co-chair (respectively) the Senate Energy and Technology Committee, unveiled their two-bill package last week after spending the first part of the year making revisions to the first draft of the bills that appeared last summer. The revisions set a 30 percent clean energy goal by 2025, which would be met by a combination of renewables and energy efficiency and which mirrors a similar plan from the State House. Michigan met its 10 percent renewable energy mandate last year. SB 438 would eliminate renewable and efficiency standards that have existed since 2008 in exchange for an Integrated Resource Plan process that allows stakeholders to intervene in requests before the Michigan Public Service Commission. The bills also preserve Michigan’s 10 percent cap on electric choice but add more requirements of Alternative Electric Suppliers to prove they can provide adequate capacity to customers into the future. The overarching discussion of the policy centers around when, how much and what kind of new electric generation comes online as Michigan coal plants retire — both to maintain reliability and affordability. “At first blush there are some things we like (about the revisions), but there are just too many major things that aren’t satisfied,” said Larry Ward, executive director of the " Michigan Conservative Energy Forum". For one, a 30 percent clean energy goal of renewables and efficiency won’t really move the needle, he said. “The number 30 percent isn’t a goal by any stretch of the imagination,” Ward said, referring to reports earlier this year that Michigan could hit that target simply through energy efficiency. Ward said positives in the legislation include an on-bill financing mechanism to help pay for clean energy projects and more funding for the state Utility Consumer Participation Board. “But for the major portions of what we’re trying to accomplish, this just doesn’t cut it,” Ward said. “It’s clearly an advantage to utility companies.”” ‘Build as few plants as possible’ James Clift, policy director for the Michigan Environmental Council, testified before the Senate committee on Wednesday that the plan would be “a step backwards for energy policy in Michigan. We think it fails to protect ratepayers, fails to protect public health and impedes economic development in the state.” Particularly, Clift said the discussion around reliability has been focused too much on the 10 percent load in the choice market and not enough on “the other 90 percent.” The provisions in the bill dealing with providing capacity during peak times “will favor building capacity to meet that demand instead of knocking that peak down. The goal should be to build as few plants as possible to meet that.” To do that, Clift said enough smart meters have been deployed across the state for Michigan to move to time-of-use pricing. A recent report said that a ComEd program in Illinois for time-of-use pricing has saved 10,700 customers $15 million since 2007. “Using all non-build mechanisms possible to meet that demand serves your purpose to make sure the cost of service reflects the cost to the customer,” Clift testified. “The utilities want to wait until we install every (smart) meter in the state. We think that’s too long. We have millions of meters our there, let’s put them to work.” Clift went on to say eliminating an efficiency standard in exchange for an IRP provides no guarantee that a utility will make that investment. Reports have also shown that an IRP alone is not as effective as standards in realizing efficiency savings and renewable development. Maintaining reliability, fairness In an interview with Midwest Energy News last week, Nofs said his first goal was maintaining electric reliability in the state as coal plants close. “The second goal was to ensure each supplier licensed in Michigan shares the responsibility to have power for their customers,” he said, referring to what major utilities have criticized as “an inherent subsidy” resulting from Michigan’s electric choice law. However, critics say the new requirements on alternative suppliers will effectively kill the choice market. Gerry Anderson, chairman and CEO of DTE Energy, testified in support of the bills last week. He said claims that the choice market would be eliminated is “hyperbole that misrepresents the true intention of the policy before you.” He notes that the 10 percent cap stays “while also taking steps to protect all customers by ensuring all energy providers meet their fair share of our state’s reliability requirements.” Steve Transeth, a consultant and former MPSC chairman, said while the bills may end electric choice “as we know it,” customers would still be able to participate within the 10 percent cap. “It doesn’t kill choice, but it probably does curtail the nature of it by requiring certain obligations on those providing open access service they didn’t have before,” Transeth said. Net metering changes Last year, the legislation also drew fierce opposition from solar advocates because it would eliminate net metering in exchange for a system in which solar generators buy power from utilities at retail and sell back their generation at wholesale prices, also known as a “buy all, sell all” model. Nofs said his bill would grandfather in those customers for 10 years and that new reimbursement rates would be “more than wholesale but less than retail.” The Great Lakes Renewable Energy Association, however, provided testimony that said the new structure would essentially sell power back to the utility at wholesale price, called the “Variable Power Supply Portion” of the retail rate, at about 4 cents per kilowatt-hour. So taking advantage continues to be the game plan for DTE and Consumers Power. What a surprise!
Wed, 11/09/2016 - 3:45pm
Here is something more to chew on Mr. Studley and Michigan Citizens. The Proposed Bills will kill many Michigan Jobs! So read on. http://www.crainsdetroit.com/article/20160529/BLOG200/160529841/state-se... {Also copied below.) State Senate energy bills threaten many, starting with solar workers OTHER VOICES Guest Blog: Comments Email Print Energy Renewable energy Opinion Jim Dulzo is senior energy policy specialist for the Groundwork Center for Resilient Communities (formerly the Michigan Land Use Institute), in Traverse City. If you like clean energy, you won't like the two energy bills the Michigan Senate Energy & Technology Committee sent to the floor last Wednesday. And you really won't like them if you want more competition among utilities, more renewable energy from your utility, and the freedom to make solar energy on your property. It's bad enough that state Sens. Mike Nofs' (R-Battle Creek) and John Proos' (R-St. Joseph) SB 437 and SB 438 make it even more difficult for others to compete with our electric utilities; torpedo the successful standards that required Michigan utilities to supply more clean, renewable energy and money-saving efficiency programs; and mess with English by redefining "clean" as "whatever meets federal emission standards," and "renewable" as "burning trash." But these bills — essentially utility wish-lists — also attack the little guys: the hundreds of Michigan workers who, using the state's current net metering law, wire up homes and businesses with solar panels. SB 438 will put many of them out of business and nip Michigan's nascent rooftop solar boom by slashing what a utility must pay a solar customer for the extra electricity his panels put on the grid. The utility rationale for doing this comes straight from the attack politics handbook: Describe rooftop solar owners as unfair people who don't pay the utility much, if anything, for their electricity, even though they depend on it when the sun's down. Utilities allege that panel owners are forcing others to subsidize them and harming poor people. Those solar owners are such subsidy hogs! Some lawmakers buy this argument because it's slightly complicated and utilities, always so generous with certain lawmakers around election time, push it hard. Should solarized homeowners pay something for using utility lines? Perhaps. But these bills are not about that; they aim to kill a still-small Michigan industry before it can properly defend itself from state-sanctioned monopolies' spurious claims. Some claims require technical rebuttals, but here are some basics: First, panel owners' excess solar power, purchased by the utility at retail, instantly goes to the neighbors next door, who pay that exact price, even though the utility didn't generate it and has no real distribution or other additional costs for it. Under SB 438, utilities can double their money on your extra solar power. Second, rooftop panels cut costly "peaker" power plants use on hot days, as well as expensive neighborhood utility substation expansions, since solar slashes peak demand. Solar also eliminates costly power line losses, hedges volatile fossil fuel costs, and cuts pollution. These are worth real dollars to utilities, but most refuse to recognize that. In fact, of 11 recent, deep-dive studies of exactly what rooftop solar is worth, just three — all utility-sponsored — set it at what SB 438 suggests: below retail. The others, by public service commissions, energy engineering firms, and advocacy groups, find solar worth at least retail. But here's the real story: Today, with rooftop solar accounting for about .02 percent of the state's electricity, the effect of making all customers cover the loss of revenue from panel power production works out to about 2 cents per customer, per month. But arriving at even that tiny sum ignores that the panels are cutting the utility's generation costs. So: Does saving customers less than a quarter on their annual bill — or likely nothing at all — justify killing many of the 1,800 direct and indirect Michigan installer jobs tallied by the Solar Foundation? Does it make sense when there's potential for so many more such jobs? States with positive solar policies are growing solar jobs 12 times faster than overall job growth. The solar "subsidy" SB 437 addresses is a big deal only because utilities and fossil fuel interests spend heavily to make it one. All electric rates are crawling with subsidies; utilities simply want to make sure that, if you ever get panels, they, not you, own them. SM 437 and 438 pack bad news for many people — from school systems needing a break on their utility bills, to local industries eager for stronger local markets for their renewable equipment manufacturing, to families wanting help cutting energy use, to solar installers who've come so far in making their product affordable and reliable. These bills, as written, make Michigan a follower, not a leader, in the national and global clean, renewable, energy revolution. They must be thoroughly amended, or they should be defeated. Just another example of DTE and Consumers Power killing the competition for electricity.
Wed, 11/09/2016 - 6:43pm
S-437 if enacted will continue prohibit community and municipal power generation via renewable energy that is alternative to that which is controlled by DTE and Consumers {Power in Michigan. It penalizes net metering. It certainly does not allow for alternative competition with DTE and Consumers.
Laura M.
Wed, 11/09/2016 - 11:49pm
Why is Bridge printing a commentary by the Michigan Chamber wholesale, without any contextualization, rebuttal, or fact-checking? Including the label "Guest Commentary" does not get Bridge off the hook. This suggests to readers that Bridge sees the Chamber's views as being in the interest of all of Michigan's people, and not simply its business interests. This sullies Bridge's credibility as a public advocacy news source.
Dave T
Sun, 11/13/2016 - 10:14am
Laura M, I am with you. This page doesn't have a single favorable comment on these Bills. This is one of the most biased, lopsided "Guest Commentaries" Bridge has provided. The only fair option for all of us is for Bridge to provide an opposing "Guest Commentary. There is no support on this entire page to support Mr. Studley's position. We know whose pocket he's in.
Chuck Jordan
Sun, 11/13/2016 - 12:06pm
I disagree. Bridge just saying he represents the Michigan Chamber of Commerce says it all. What do you expect? And Zeke provides plenty of evidence to counter as a "guest commentary." Of course our Chamber bought legislators will support what is best for their employers, which means that most of us are screwed.
Craig
Mon, 11/14/2016 - 8:40am
What Michigan residents do NOT want is mandates generated in response to "climate change" science that is either questionable or, worse, fabricated. We've been told for years that higher electric rates are necessary to pay for renewable energy systems that are necessary to prevent the end of the world. I am tired of this nonsense. I am tired of being lied to and taken advantage of by politicians, lobbyists, environmentalists, and plain old-fashioned carpetbaggers coming to my state, my neighborhood, to take my money and spoil my quality of life. All I can say is "get out and don't come back". Let me repeat that for the slow-learners: Get out and don't come back.
Anna
Mon, 11/14/2016 - 1:14pm
Sorry Zeke, but you are dead wrong in your assertion that rooftop solar would cut the use of peaker plants on hot days or any other time. Solar generation generally drops to near zero by an hour to two before sunset, while the peak demand for power on hot sunny days extends to several hours past sunset due to the prevalence of air conditioning. The highly time-variable profile of solar panels, where every passing cloud causes a dip in the power supplied, translates into more and more utility effort required to maintain voltage and frequency. Variations in either cause operating problems and potential early failures for consumer electronics. One method utilities can use to maintain power quality is to run more small, fast-response power plants, AKA, peaker plants, to switch power in and out of subnets as needed. Second, your assertion that "excess solar power ... instantly goes to the neighbors next door ... even though the utility didn’t generate it and has no real distribution or other additional costs for it" as a justification for maintaining net metering subsidies is incorrect. In fact, distributed solar generation installation doubles to triples the load on the neighborhood power distribution grid compared to using the same amount of utility-generated power. This causes more wear and tear on capacitors, cables, and the need for more or larger neighborhood substations. Redistributing solar-generated power creates additional transmission and distribution losses, and therefore costs, rather than decreasing them as you claim. Net metering subsidizes those who can afford and whose homes are well-sited to utilize solar panels by charging everyone else, including apartment dwellers, low income families, and retirees on a fixed income a larger proportion of the total cost of maintaining the power local distribution system. Utilities should charge the owners of solar panels fairly for the distribution services they actually use. Paying wholesale power generation rates, and charging distribution grid connection fees based on peak power flow in either direction, as is enabled by the new legislation, comes much closer to matching costs to benefits for individual customers. And there's another cost of solar power to utility customers that you ignored. The local distribution system connects all power created by rooftop solar panels to one of three phases in each neighborhood distribution sub-grid. Overloading that phase creates poor power quality that decreases the efficiency and damages electric motors. That leads to premature failures of fans, refrigerator and freezer condensers, furnace blowers, water pumps, etc. Utilities don't bear these costs directly, but society certainly does, including the owners of solar panels who are creating the problem.