Government and Sustainability

Utilities say energy bills will keep the lights on

June 10, 2016
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Utility companies say a pair of energy bills that have garnered widespread criticism from the business, environmental, education and health communities is necessary to keep the lights on in Michigan.

Daniel Bishop, director of media relations for Jackson-headquartered Consumers Energy, said reliability is at the heart of Consumers Energy’s support of Senate Bills 437 and 438, introduced by Sen. Mike Nofs, R-Battle Creek.

He said the bills continue to allow up to 10 percent of utility customers to shop around for their energy, while at the same time assuring the utilities that alternative energy suppliers can provide the energy they promise.

“The current proposal doesn’t force anyone back to the utility company. It doesn’t tear up any contracts,” Bishop said. “It retains the 10 percent but also says we need reliability assurance in Michigan.”

Without the reliability provisions, Bishop said choice and non-choice customers alike are at risk of brownouts or blackouts as Michigan’s energy surplus shrinks.

“We are in an unprecedented period in terms of energy change in our country and in our state,” Bishop said.

He noted Consumers Energy is shutting down 26 coal plants, including seven that closed in April.

The coal plant shutdowns are a result of existing Environmental Protection Agency rules, and Bishop said new rules are on the horizon in the form of the Clean Power Plan.

“When the Clean Power Plan moves forward, it is going to put more pressure on coal plants,” Bishop said. “We are moving to a cleaner future, which is good, but it’s putting reliability in the crosshairs.”

Bishop said as a result of shuttering coal plants, Michigan is seeing a reduction in the surplus energy it’s come to rely on.

“The surplus is rapidly going away, and the alternative suppliers haven’t invested in building power plants in Michigan,” Bishop said.

John Austerberry, communications manager for Detroit-headquartered DTE Energy, agreed, noting DTE announced last week the closure of three power plants with eight generating units. The shutdowns will begin in four years.

“The urgency to start planning to replace that generation is here now,” he said.

As DTE begins replacing those power plants, Steven Kurmas, vice chairman for DTE Energy, said DTE will not build any excess generation as part of its plan.

“Why would we put that cost generation on our customers for the advantage of others?” he asked. “Who will build additional generation to serve that 10 percent choice market?”

Without enough power generation, everyone is at risk of having the lights turned out, according to Bishop.

“The electric grid is like a spider web, and we are all connected,” he said. “If the alternate suppliers are short, all of us are short. … The last thing we want is the headline: ‘Michigan causes blackout,’ because the out-of-state marketers failed to provide power to their customers.”

Opponents of the proposed electric choice provisions say it will place too many barriers on alternative energy suppliers looking to move into the market.

Josh Lunger, director of government affairs for the Grand Rapids Chamber of Commerce, said one of the new provisions would place a capacity charge — paid to the utilities for 10 years — on any newly admitted customer to the program, which he said would negate the value of electric choice.

Bryan Harrison, government affairs manager at Ada-based Amway, said Amway has saved hundreds of thousands of dollars a year since it began taking advantage of electric choice.

Lunger said several companies testified before the Michigan House to savings millions of dollars.

“Savings aren’t the only benefit. A lot of businesses appreciate the ability to manage their own risk,” he added. “For example, they can get a long-term contract or they can do renewable energy if they want.”

Bishop acknowledged that in the past, businesses were essentially subsidizing residential customers and paying higher bills because of it, but he said that’s no longer the case.

Kurmas agreed choice customers benefit from a tremendous cost savings, but he said it’s being delivered on the backs of utility customers, not because of a competitive market.

He said if choice were to disappear, DTE could give every customer a 5 percent discount.

Austerberry said one alternative energy supplier in Michigan is currently doing what DTE would like to see other suppliers do.

“Wolverine Power Cooperative, they are doing what this legislation calls for, and that is providing generation for their own customers,” he said. Wolverine, based in Cadillac, provides wind-based alternative energy.

The energy bills still await a vote by the Michigan Senate.

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