Published in Energy
Enbridge's Line 5 pipeline, courtesy of the National Wildlife Federation. Enbridge's Line 5 pipeline, courtesy of the National Wildlife Federation.

Crystal Ball 2019 Energy Outlook: Michigan’s 2019 energy future still firmly rooted in 2016

BY Sunday, December 23, 2018 05:03pm

It’s been two years since the Legislature passed sweeping energy reform bills, yet the laws remain front and center for those working behind the scenes on energy policy.

In addition to boosting the state’s renewable energy portfolio to 15 percent by 2021, Public Acts 341 and 342 of 2016 (which took effect in April 2017) established a series of benchmarks for how the Michigan Public Service Commission would set policies on issues including energy efficiency, long-term utility planning, opt-in green power programs and market purchases. For more than a year, state utility regulators have sought input from utilities and various interest groups on how these policies should be designed.

The state and utilities are now putting the policies in action.

Groups involved in the details of this planning expect to see utility proposals materialize this year that will shape the course of energy policy and generation for years to come as coal plants across the state are retired and replaced with natural gas and renewable energy.

“Our primary focus continues to surround the 2016 energy laws,” said Jason Geer, director of energy and environmental policy with the Michigan Chamber of Commerce. “There’s still a lot more that has to happen.”

Outside of these key regulatory proceedings, though, are an incoming Democratic administration that could bring an even greater emphasis on renewable energy, legal uncertainty with the fate of the Line 5 pipeline in the Straits of Mackinac, and the build out of Michigan’s electric vehicle infrastructure.

Here are some key energy issues coming in 2019:

Line 5

Perhaps the most widely covered energy story right now centers on the future of Enbridge’s Line 5 pipeline in the Straits of Mackinac. Gov. Rick Snyder looked to cement his plan before leaving office to build a tunnel for the pipeline and potentially transmission cables. 

Supporters say if oil is going to continue traveling the Straits — as a shortcut from Superior, Wis. to Sarnia, Ontario — then a tunnel 100 feet beneath the Great Lakes floor is the safest way to do so.

However, critics say the move is unconstitutional for giving away public property for the benefit of a private corporation while avoiding key environmental permitting processes.

With multiple agreements between the state and Enbridge in place, as well as legislation passed during lame duck to help secure the deal, opponents now turn to Gov.-elect Gretchen Whitmer and Attorney General-elect Dana Nessel to block the plan in court. Any type of legal challenge could last for years.

Electric vehicles

Jackson-based Consumers Energy proposed the first utility spending plan on electric vehicle charging stations in March 2016. It was not well-received.

After the company withdrew the plan in early 2017 because of widespread criticism, the MPSC launched a series of stakeholder meetings to sort out questions involving who should pay for charging stations and where they should be located. While the state doesn’t have definitive answers to these questions, it’s making progress. 

Advocates hope the MPSC and the Whitmer administration keep up the focus on EVs.

“We think about it in terms of different venues,” Laura Sherman, vice president of policy development for the Michigan Energy Innovation Business Council, said of the MPSC and the administration. MEIBC also led a series of meetings in 2018 around EV deployment. 

“There’s definitely lots of legislative ideas being kicked around,” Sherman said. “We’re in those discussions.”

Long-term plans and independent producers

In June, Consumers also was the first regulated utility to propose its long-term Integrated Resource Plan required under the 2016 laws. The plan calls for a 43 percent renewable energy portfolio by 2040 while eliminating coal in that time. Consumers President and CEO Patti Poppe told MiBiz earlier this month that the company will focus on executing the plan in 2019.

Meanwhile, DTE Energy’s plan is expected in March, and the Detroit-based company has already signaled a similar shift to renewables and carbon reductions. 

While IRPs provide a roadmap, they are still subject to MPSC approval and input from interested parties.

Shortly after Consumers’ proposal, independent power producers raised concerns over their ability to sell generation under the federal Public Utilities Regulatory Policy Act of 1978, which guarantees them utility contracts at certain rates if they can build the capacity at the same cost as or cheaper than utilities.

In October, independent power producers called MPSC rulings on Consumers’ proposal a “mixed bag” for allowing near-term development opportunities while creating longer-term uncertainty over rates they would be paid. A similar argument will likely play out over DTE’s proposal.

Connecting distributed generation

As utilities face increasing obstacles for wind energy development, solar’s more modular nature and declining costs are making it more attractive to meet Michigan’s renewable portfolio standard and utilities’ clean energy goals.

While utilities favor larger-scale projects, the contention this year will likely focus on residents’ and businesses’ ability to generate their own power and sell it back to the grid.

Also included in the 2016 energy rewrite was a requirement for utilities to come up with replacement programs for net metering, which has allowed customers with solar to sell excess generation back to the grid for a bill credit.

While utilities and advocates still disagree over the value of that power, the MPSC requires utilities in their next rate request to propose replacement programs. So far, DTE Energy is the only downstate utility to have proposed a replacement that, unsurprisingly, is criticized for undervaluing rooftop solar’s value.

“We’ll continue to support legislation that fully values the contribution of distributed generation to the grid,” Sherman said.

The MPSC also is considering replacing 2009 rules for interconnecting utility customers’ self-generation projects.

“Everything that has to do with solar and wind build out is going to be affected by these interconnection rules,” said Ed Rivet, executive director of the Michigan Conservative Energy Forum.

A common theme among each of these issues is how Michigan prepares for the energy transition — namely retiring coal plants — while keeping electric prices low for customers and allowing parties other than utilities to access the market.

“We have to prudently make decisions about how we continue to shut down coal and meet energy demands,” Rivet said. “We’re all about balancing the portfolio while we move to a clean energy future.” 

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