Energy & Environment at The Hill

National trend on energy freedom to be tested in bellwether state

At a time of stark political divides, falling prices for renewable power seem to be bringing Americans together. In “red states” and “blue ones”, from Florida to Michigan, and North Carolina to California, consumers are lobbying for more energy freedom, including the right to “go green”. And not only because it has become more affordable. 

In Florida and North Carolina, it’s about property rights. If you own a home, say solar advocates, the government has no business stopping your from putting a PV system on your roof, no matter who finances it. That argument has won both Tea Party and Sierra Club backing for an Energy Freedom Act in North Carolina and a constitutional amendment in Florida  — all aimed at ensuring that home-solar systems can interconnect with the grid. 

{mosads}In California, the demand for greater access to renewables has been championed by a score of municipalities who are forming their own electric companies. One of the most prominent is the desert town of Lancaster, led by Republican Mayor Rex Parris. It’s all about local control. San Francisco’s liberal mayor, Ed Lee, is the latest convert, backing a new city plan to buy tens of megawatts of renewable power for any resident or business that wants it. And this month, thirteen California Republican senators crossed the aisle to join 21 Democrat Senate colleagues to approve a bill that will open up the state’s electricity market to business consumers that want to buy 100 percent green power, rather than the 23 percent renewable mix now mandated for the state’s utilities. 

These cross-party activities provides the backdrop for Michigan’s current energy debate over clean power and consumer choice.  In March, Gov. Rick Snyder (R) unveiled a landmark policy to break the state’s historic dependence on coal-fired power (still over 50 percent in 2014). By cutting energy waste and using smarter procurement, Snyder said the state could meet 30 to 40 percent of its electricity needs from renewables by 2025. 

The governor left most of the particulars to the legislature, however, where the Republicans have a super-majority in both houses. That has left lawmakers to debate several largely incompatible proposals to guide the state’s energy future – some of which favor the new pro-choice national trend; others would rein it in. Before delving into the wonky details, some history is useful. 

The starting point for Michigan’s debate is the state’s 2008 energy law. It adopted a Renewable Portfolio Standard (RPS) equal to 10 percent of the generation mix in 2015 for electricity providers. The law also sharply cut back retail competition, however, capping alternative suppliers — whether green or otherwise — at 10 percent of the utilities’ load. 

Fast forward to 2015. As in other Midwestern states, a prime issue is how Michigan should respond to the planned closure of numerous coal plants due, in part, to stricter EPA pollution controls. Some Republicans, backed by the states’ major utilities, DTE Energy and Consumers Energy, want to re-monopolize the market to provide a stable utility rate base for funding new generation. Many Democrats are supportive (ostensibly to protect union jobs) but, in return, they want the utilities to accept a higher 20 percent RPS. 

However, ending the right of Michigan’s homeowners, schools and businesses to buy cheaper or cleaner power from competing suppliers is unpopular. (Snyder thinks it is unnecessary too.) At a recent hearing, educators told the legislature that the resulting price hike for electricity would cost tens of teachers’ jobs. Michigan has some of the nation’s highest electricity rates (the regulated rate of return is roughly 11 percent), and Michigan manufactures also protested loudly. More not less competition is the answer, many said. 

Some of the state’s best know brand names are in this camp, including Herman Miller, Dow, GM and Amway, which is owned by the Devos family, a major contributor to Republican causes. Amway, like Herman Miller uses Michigan’s electric choice program to buy wind power for its facilities and it does not want any utility to override its choices. 

How this debate will shake out is still uncertain but one option may be an “all of the above” approach. Tap into the current national trend for energy choice by using regulation and markets to green Michigan’s energy mix without new mandates. Here is what the main elements might include. 

First, the current 10 percent cap on competition would be waived where most of the power comes from sources meeting the state’s existing RPS. This kind of program would give Michigan companies a clean choice, but not an unlimited one. 

Second, a clean choice must be a fair choice. Competition should not be subsidized. This means ensuring that alternative suppliers (and their customers) make a fair contribution to the resources needed to ensure reliable electricity for all Michiganders. (States like California have done this by imposing  “resource adequacy charges” on all service providers.) 

Third, trust but verify. Let the market drive the next wave of clean choice but give Michigan’s Public Service Commission (PSC) authority to oversee the clean choice plan with input from the state’s new Agency for Energy. 

One last thought: When it comes to the EPA, clean choice is a “no regrets” policy.

Assuming that the EPA’s new carbon pollution rules are upheld by the courts, then the more clean power Michigan  (or any other state ) has,  the easier it will be to comply. Alternatively, if new EPA rules are struck down, then the cost of more renewable energy will have been shouldered largely by those willing to bear the bill. That’s what energy freedom is all about, and why it may bridge past policy divides in Michigan and beyond.

Staple is a University of Michigan alumnus and the CEO of the Washington, DC-based American Clean Skies Foundation, an independent non-profit working on clean energy issues.

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