LANSING – The Michigan Senate Energy and Technology Committee continued to hear testimony on its energy policy on Thursday, with much coming from those who had hoped the proposal would maintain the state’s Renewable Portfolio Standard and from schools participating in electric choice concerned about increased energy costs.

Ray Telman with the Michigan Schools Energy Cooperative and Richard Spilky, in the retail analytics department at Constellation, an alternative energy supplier, spent a solid hour before the committee asserting their concerns over possible increased costs to schools that participate in choice under the Senate legislation as it stands before the committee (SB 437and SB 438). But the testimony also reignited the feud between the committee chair, Sen. Mike Nofs (R-Battle Creek) and Sen. Mike Shirkey (R-Clarklake) as it relates to electric choice.

Nofs’ proposal keeps the current 10 percent electric choice market, essentially grandfathering those in it, but it also places new requirements on alternative electric suppliers they say would essentially run them out of the market. Shirkey has introduced legislation and, at nearly every committee, expressed his support for responsibly expanding choice under certain conditions.

“Much has been made about increasing capacity prices in MISO’s wholesale market, because the clearing price capacity in MISO’s planning reserve auction went from $3.48 a megawatt-day last year to about $72 a megawatt-day for the 2016-17 planning year. Even with this increase, customers like MISEC can, and are, experiencing significant savings with retail choice,” Spilky said.

He continued, “It is true that in the competitive wholesale capacity market, prices do change year over year, but customers in Michigan, including the MISEC schools, still receive great value from markets despite these price changes.”

Spilky said it is the customers receiving the cost savings benefits, and that the idea that the AESes are doing so was “a misconception.”

“The capacity purchasing requirements in the substitute bill would still make Retail Open Access cost prohibitive,” Spilky said. “The bill denies suppliers the ability to access the most common and available wholesale market for capacity.”

It does so, he said, by requiring AESes to secure two years of firm capacity for retail load in a timeframe that is “neither feasible nor cost effective.” The bill also eliminates the ability of Constellation to use the MISO planning reserve auction in May for compliance since it requires an AES to show owned or purchased capacity in the November prior to the auction – a point other electric choice advocates have made.

Telman also presented a graph to senators showing the cumulative savings of schools in each senator’s district from participating in the choice market, which totaled more than $65 million (though he acknowledge there may be some overlap across districts).

ENVIRONMENTAL CONCERN: The Michigan League of Conservation Voters also opposed the bill, saying the legislation would mean “higher utility bills for families and businesses, and more pollution.”

Several environmentally-driven groups raised issue with the lack of Renewable Portfolio Standard or renewable-specific mandates despite that Mr. Nofs has long said he would include a renewable mandate in his legislation. He has said that if renewables are in fact cheaper – as many have said they are – they should be able to prosper on their own in a competitive marketplace.

But the lack of inclusion of such a mandate and modifications to energy efficiency standards in the plan would “undermine our clean energy sector and send jobs and investment to other states,” Charlotte Jameson, policy director for the League, said.

“Instead of turning the clock backward on the progress we’ve made, the Legislature should stand up for ratepayers and rein in costs by increasing our renewable energy and energy efficiency standards,” she said. “Requiring utilities to reduce energy waste and lock in long-term contracts for low-cost renewable energy will mean less pollution and lower utility bills for Michigan ratepayers.”

The Michigan Conservative Energy Forum also spoke in opposition to the bills.

“Energy is something we all use. Increasing Michigan’s commitment to renewable energy and energy efficiency is something we all need,” said Larry Ward, executive director of MCEF. “Diversifying our energy production and increasing renewables will protect ratepayers from future price fluctuations, ensuring the security of our nation and our local communities, create new jobs and grow our economy.”

Jeff Schlegel, an attorney representing Whirlpool Corporation, Johnson Controls, Schneider Electric, United Technologies and Ameresco, gave five suggestions for how to get those companies on board with the legislation.

“Investing in reducing energy waste is the lowest-cost energy resource available. By continuing to invest in energy waste reduction, we can lower total energy costs for all Michigan customers, mitigate fuel and electricity price increases, and build a more affordable, reliable electricity system,” Mr. Schlegel said.

Specifically, the companies recommended the Senate panel retain or expand Michigan’s energy optimization standard; eliminate or at least increase the restrictions on the level of investment allowed for energy waste reduction efforts; pursue additional energy waste reduction opportunities above and beyond what the current standard has; support performance-based incentives for utilities to deliver on energy waste reduction; and use competitive markets and private contractors to deliver energy waste reduction products and services to customers.

More hearings on the bills are expected to be had next week, including testimony from Consumers Energy.

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