LANSING – The Michigan House Energy Policy Committee reported a bill this month that included language requiring alternative electric suppliers in the state to have enough capacity for their customers for the following three years if a shortfall was determined, and some choice advocates say it would compromise the market in the state.
Jason Geer, with the Michigan Chamber of Commerce, said in a Tuesday interview that the language in HB 4298 relies on the Public Service Commission to determine if there is a capacity shortfall, and the Chamber is working on language to ensure there is a genuine problem with capacity before the requirements are triggered.
In the language passed this month, a projected shortfall could be determined if capacity prices for electric customers increased by 1,000 percent. According to Geer and Rep. Gary Glenn (R-Midland), the vice chair of the committee and an advocate for the choice market, an increase of 1,000 percent would not be difficult to achieve.
“We have some work to do in the language to make sure it works as intended to do,” Geer said.
That 1,000 percent increase language has sparked fears among choice supporters that it would easily be exceeded and enable the end of electric choice, sending customers back to the incumbent utilities.
Geer also said there is some concern that the PSC would constantly say there is a shortfall. If a shortfall is determined, a variety of new regulations would fall onto choice entities in the state, which Glenn said would cause them to cease to exist.
However, Geer said if there was an actual shortfall, there would be more legitimate concerns than the choice market, so the key is ensuring the triggers are only pulled if there is a real problem with capacity.
Glenn pointed out that at the beginning of the year, a shortfall was projected in the state, but within a few months, it was determined the state actually had a capacity surplus.
Geer said if the language is consistent and more specific, it could hold the compromise for those who want to keep choice and those who support a fully regulated market.
“This is a very new idea we are trying to create here in dealing with a new situation in our state,” he said. “We think it can work and we think it can work well.”
Kelly Rossman-McKinney, spokesperson for Citizens for Michigan’s Energy Future, which has backed the legislation, said the 1,000 percent language merely requires alternative electric suppliers to prove that they will have the capacity to serve the market.
“There’s no aspect of it that would eliminate choice unless those providing an alternative could not prove they had capacity,” she said. “It is a step to ensure that Michigan customers will always have reliable, accessible electricity.”
Michigan Agency for Energy Executive Director Valerie Brader said during committee this month that Governor Rick Snyder made huge compromises in the language, because new regulations would not be put on choice entities unless there was a shortfall.
Snyder had originally asked for a five-year outlook for choice entities, to ensure they had the capacity to serve for those years.
And Rep. Aric Nesbitt (R-Lawton), the committee’s chair, supports completely regulating the market and getting rid of choice.
But Glenn said the simplest solution is just to allow the choice market to remain as it is currently. He also questioned the Chamber’s position on choice, saying its argument to sustain the system has not been clear.
He also criticized provisions in the bill that would require customers going back to the incumbent utilities from the choice market to remain there for 15 years or 20 years depending on the effect the switch had on the utility.
Glenn said he believes if an amendment were put up on the House floor to allow all school districts in the state to buy electricity from the choice market without counting toward the 10 percent cap, it would pass.
He also said he continues to have concerns about the process and wants to be sure House members are able read amendments and understand what they do.
Glenn said he would like to see a roll call vote on amendments when the final vote is taken on the floor, rather than the usual approval of amendments in the House, when the presiding officer simply gavels them through.
Glenn added he expects the House Republican caucus to have concerns with language added to the bill implementing a goal for utilities to reach 30 percent of energy production through renewables or energy efficiency by 2025.
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