After months of being "90 percent there," the alternative energy package that kept most of the Lansing lobbyist corps gainfully employed since last fall finally passed the Legislature today.
Gov. Jennifer Granholm, who had long championed the package and led a town hall on energy at the Democratic National Convention, was already touting it on her trade mission in Japan. She and Democrats claim it will create 30,000 new jobs, although Senate Majority Leader Mike Bishop, R-Rochester, who ultimately supported it, was skeptical.
Senate Bill 213 and House Bill 5524, which were tie-barred, both shot out of conference committee this morning after MIRS confirmed before 10 a.m. that a deal was reached. The last piece worked out Wednesday night was on net metering, making SB 213 "an omnibus bill," according to sponsor Sen. Patty Birkholz, R-Saugatuck.
Birkholz and Sen. Randy Richardville, R-Monroe, become the go-to sources on the legislation in the Senate while Rep. Jeff Mayes, D-Bay City, Rep. Mike Nofs, R-Battle Creek, and Rep. Frank Accavitti, D Eastpointe, became key negotiators in the House.
In the end, the bills won over enough Senate Republicans and dashed the hopes of smaller energy companies and those clamoring for more consumer choice.
S 213, which created new alternative energy goals and a projected $200 million energy efficiency program, passed 83-24 in the House. The Senate voted 26-10.
The House voted 78-29 on HB 5524, which guarantees DTE and Consumers Energy 90 percent of the future energy market and ends industry's subsidies of consumers' rates. It passed the Senate 25-11
The bills were given immediate effect by the two-thirds majority.
A third bill on energy efficiency, SB 1048 sponsored by Birkholz, also passed 36-0 in the Senate and 106-0 in the House.
SB 213 ballooned from nine pages to 102. It ended up encompassing a 10 percent mandated Renewable Portfolio Standard by 2015, which includes solar, biomass, wind, hydro, geothermal, municipal solid waste and landfill gas. Consumers must build or purchase 200 megawatts of new renewable energy by 2013 and 500 mw by 2015. DTE has to build or purchase 300 mw by 2013 and 600 mw by 2015.
The Michigan Public Service Commission could grant two deadline extensions for the 2015 deadline, including feasibility limitations, equipment costs and availability, transmission and interconnection, electric system reliability and labor shortages. If two extensions are granted, the provider could petition the MPSC to be in compliance.
The cost cap for renewables is $3 per month for residential, $16.58 per month for commercial secondary and $187.50 for commercial primary or industrial. If providers don't meet the RPS, they can't recoup the cost of purchasing renewable energy credits from ratepayers.
There is $40 million in consumer tax credits for energy efficiency. And there's a net metering provision that allows consumers to sell energy back on the grid.
Opponents claim HB 5524 kills customer choice in favor of the two incumbent utilities, but proponents say currently others are only 2.5 percent of the market. With 10 percent allowed under the bill, Richardville said this actually increases competition four-fold.
The controversial deskewing provision means business will no longer subsidize consumer rates. That's capped at 2.5 percent over five years.
The bill provides a 25 percent income tax credit to residents for rate increases due to the RPS for the first three years. The bill also requires utility companies to clearly list the cost of RPS fees on customer bills.
Cost overruns for new plants are limited to 10 percent for new plants, which means added costs passed on to consumers up front. Nofs argues that in the 14 years it takes to build a nuclear plant, 10 percent is low and Richardville said this is the standard used for roads. But Brown said that on a $5 billion plant, ratepayers could be on the hook for $500 million and that's not fair.
A certificate of need for combing $500 million in investments over a six-year period are put into one CON. The MPSC Chair will not report directly to the Governor. There also were two carve-outs for two companies, Tondu and Cleveland Cliffs.
Bishop said he viewed this as a long-range energy plan and not a job-creator. He acknowledged it was hard to vote for, as it was for many in the Senate GOP caucus.
He said Michigan's RPS was well-chosen at 10 percent, saying other states with 25 percent went for the "unattainable and unrealistic."
Reaction around Lansing to the energy package ranged from exaltation to dismissal with consumer groups and competitive energy suppliers making up most of the latter category.
With the state's competitive energy market now limited to 10 percent of the market, DTE Energy and Consumers Energy will be able to swing a bigger bat, which the alternative energy suppliers say will mean more money coming out of the consumers' pockets.
"People told me, 'Don't worry, the sun will come out tomorrow," said Brenden Ringlever, a Michigan Legislative Consultant lobbyist working for Constellation Energy. "It better because I won't be able to turn on my lights because it'll be too expensive."
The Michigan Alliance for Competitive Energy, which is backing competitive providers, in a memo to lawmakers today urged them to make sure their constituents were fully aware of the "devil in the details."
"Will your constituents be happy to learn they can't switch to another provider but their neighbor can because she managed to do it sooner?" asked Gary Wolfram, chair of MI-ACE. "Is it really possible that all of the 38 Senators and 110 State Representatives will be fully informed of the consequences of these bills before the vote is taken?"
Wolfram continued his arguments that the energy reform package is "primarily designed to ensure the monopoly of energy production for Detroit Edison and Consumers Energy."
Although the package mandates that 10 percent of the state's energy production come from alternative sources by 2015, the American Wind Energy Association opposed the plan, in part, because of a provision that basically limits future wind turbine production to those doing business with DTE and Consumers.
Combined with the relatively low renewable portfolio standard of 10 percent by 2015, AWEA policy manager Hans Detweiler wrote to lawmakers that "there is simply no incentive for job creation for at least four years."
AWEA is also worried that consumers will tie the inevitably higher energy bills around the necks of alternative energy suppliers like wind.
Dave Waymire of the Customer Choice Coalition lambasted the process as being completely cooked up behind closed doors. Waymire said few understood the final legislation -- least of all most of the lawmakers who voted on the bills and the press assigned to cover it -- despite the impact it will have on the pocketbooks of Michigan's consumers.
Waymire said nobody got an opportunity to testify in a public forum on the end product and that several groups never got a chance to completely get everything off their chest. Outside of that, he questioned how the bills were drafted, in a process that was held by select small groups of staff and key lawmakers behind closed doors.
"Anyone who says that this is an open process needs to move to Russia," he said. "That is the same process they use over there and call it democracy. Every observer of this process knows this in their heart of hearts."
Several people pointed out to MIRS that few legislators probably had read the new drafts of the bills, especially the 102-page SB 213, before voting this afternoon. No legislator admitted that he or she hadn't.
Terry Harvill, vice president of Constellation Energy, a competitive provider, said his firm was "disappointed" that there wasn't true compromise.
"There was never a point where people sat down and talked and said 'no' to the utilities," Harvill noted. "There really wasn't any compromise." Harvill said the bills moving as a result of the compromise aren't about good energy policy because DTE and Consumers played the jobs card. You'll see DTE and Consumers adding jobs but that is due to higher energy bills. Down the road, maybe not this year or next year, but once the utilities embark on their efforts at renewable energy, people are going to see the impacts of their decisions today."
On the flip side, the number of groups that praised the package's passage was voluminous. The Sierra Club, the Michigan Environmental Council, the Chamber of Commerce, Michigan Public Service Commissioner, the Big Three Autos, the Michigan Manufacturer Association, Dow, Michigan Electric and Gas Association and, of course, DTE and Consumers Energy were on the list of supporters.
"Until today, Michigan was at a distinct disadvantage in competing for this new era of jobs," said James Clift, Policy Director of the Michigan Environmental Council. "This will help provide the impetus to transform Michigan's economy from the past to the future. Every megawatt-hour generated by wind power or saved by investing in more energy efficient equipment means real jobs for Michigan engineers, laborers, installers and contractors."
Gov. Jennifer Granholm told Michigan Public Radio Thursday morning she looked forward to signing the bills as soon as they arrived at her desk and trumpeting the news of the "historic agreement" to Japanese business officials during her current overseas trip.
Granholm added that the legislation sends a "signal to the world that Michigan is ready to build a bright future for our citizens by creating jobs, diversifying our economy, and ensuring that our 21st century energy needs are met in a way that protects our pocketbooks and the planet."
By The MIRS News Service
Posted: Thursday, 18 September 2008 10:03PM
