Commercial, Energy Efficiency, Industrial, Regulation, Utilities, Regulation  -  December 19, 2016

Michigan energy reform maintains customer choice program, increased renewable energy mandate

Reaching a last-minute compromise, Michigan lawmakers on Dec. 15 passed long-sought-after reforms to the state's energy policies that will increase the renewable energy mandate and maintain the state's retail electric choice program. 

Republican Gov. Rick Snyder has supported the revisions and is expected to sign them into law. Michigan's energy future has been a focus of Snyder's administration; the governor has said replacing the state's aging coal-fired power plants with renewable energy will increase Michigan's energy independence, lower costs and help the environment.

"We now have a statewide energy policy that will save Michigan residents millions of dollars on their electric bills, alleviate concerns about having enough capacity to power the daily activities of 10 million people and find new ways to use our existing energy grid more efficiently," Synder said in a statement. "This policy also allows for more consumer choice in our growing market."

Michigan's retail open access program, also referred to as its customer choice program, which was established with the passage of the state's 2008 energy law, allows large energy users to switch from their incumbent utility to an alternative supplier, though the option gets capped at 10% of an electric utility's average weather-adjusted retail sales. 

The Detroit News reported

The final legislation won over some House Republicans who feared that a proposed "capacity charge" pushed by the utilities could have effectively killed the choice program, which allows alternative and out-of-state suppliers to provide 10% of Michigan's electricity at unregulated and typically lower rates. The choice program is primarily used by large manufacturers and school districts that say it has saved them significant cash on power needs for big buildings. A choice coalition led by the Grand Rapids Chamber of Commerce worked with Snyder over the past week to finalize the deal.

The Oakland Press reported that the revision also specifies that if customers who have switched return to their home utility, they cannot switch back to a competitor for six years. With the 10% limit already reached, the newspaper reported that more than 11,000 customers of the state two investor-owned utilities, CMS Energy Corp. and DTE Energy Co., are in a queue waiting to switch suppliers. 

"The legislation specifies that if market conditions change, competitors lose customers in mass to the utilities with no new customers to take their place and choice falls below 10%, that new ratio would become the cap for six years," the newspaper reported. 

The new legislation also increases the state's renewable energy standard, which currently requires electric providers to produce 10% of their power from renewable sources, to 15% by the end of 2021. The Detroit Free Press reported that the Michigan Environmental Council called the legislation a "vast improvement over earlier proposals" that would have eliminated any mandate for clean energy. The bills also keep intact the state's energy efficiency incentive programs for utilities. 

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