Energy Deal Reached on the Last Day of Lame Duck

Posted on December 15, 2016 by Dene Westbrook

Legislation making major changes to how the state regulates energy, including the construction of new power plants, how customer choice is managed and increasing the percentage of electricity that must be generated from renewable sources finally passed the House and the Senate.

Passage came after a tentative framework of a deal came together between the state’s major utilities, Consumers Energy and DTE Energy, and those advocating greater customer choice, two groups long at odds on energy legislation.

The approved versions of SB 437 and SB 438 would put in place strict parameters as to how the Public Service Commission would calculate the charge alternative electric suppliers would pay Consumers or DTE if they did not reach a contract with an entity to supply them with power to sell to their customers.

The deal drops Senate language that would have meant a minimum 4-year charge and maximum 10-year charge on customers of alternative electric suppliers. The bills could also reduce the size of the choice market if those customers return in large numbers to utilities.

The legislation sets up a revised certificate of necessity process for utilities to win state approval of building new power plants or purchasing existing ones. And another major provision requires utilities to submit integrated resource plans to the state showing five-, 10- and 15-year projections of their load obligations and plans to meet those obligations.

The legislation would increase the percentage of electricity utilities must generate from renewable sources from 10 to 15 percent by 2021.

Finally, those who currently generate their own power through the net metering program would avoid having to pay a charge to support the grid for the first 10 years, but there would be a study on the subject with the PSC later implementing a tariff no sooner than 18 months from the bill’s effective date on new net metering users.

The Governor is expected to sign the bills.

John LaMacchia is the Assistant Director of State and Federal Affairs for the League handling transportation, infrastructure, energy and environment issues. He can be reached at [email protected] or 517-908-0303.

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