LANSING – The final legislative session day of the 98th Legislature concluded with passage of the legislation that has dominated the 2015-16 term – a wide-ranging rewrite of the state’s energy laws.
Governor Rick Snyder, who brokered the 11th-hour deal with the utilities and advocates for greater customer choice who fought bitterly for the past two years, said he will sign the legislation.
Among the major changes to how the state regulates energy under the legislation: a revised system for how the state considers requests for construction of new power plants, how customer choice is managed and increasing the percentage of electricity that must be generated from renewable sources. The final vote came in the Senate at 6:50 p.m., capping a long two days at the Capitol where at least one chamber was in session for almost 33 consecutive hours.
“This is a major milestone for Michigan,” Governor Rick Snyder told reporters at the Capitol after the final vote. “It was a great bipartisan effort. It was a great case of watching various coalitions come together and all get behind something. And I’m proud. If you look at it, we’re going to have a very adaptable policy, but it’s going to focus on reliability, affordability and environmental sustainability.”
Amy Heart, spokesperson for The Alliance For Solar Choice, said she was encouraged that retail net metering was maintained to “ensure a level playing field for self-generation in Michigan.” She added: “While Michigan’s energy bill was large in scope and impact, we were encouraged to see elected officials from both sides of the aisle work to improve the bill over the past two years in an effort to protect a consumer’s ability to generate their own electricity with solar. Legislative leaders heard loud and clear that retail net metering must be maintained to.
“We still have serious concerns over how the distributed generation tariffs will be calculated based on the language in the bill,” she said. “It will be critical for the Commission to take into account the benefits that individual investments in rooftop solar and other distributed resources provide, such as increasing energy security and reliability and reducing other utility spending.
Said Heart: “It’s now up to elected officials to help guarantee a fair, equitable process–and we look forward to working with Governor Synder and legislative leaders to ensure no discriminatory charges will be levied on solar customers going forward in order to protect Michigan’s solar jobs, spur local innovation, and lower energy bills across the state.”
Certainly, it was a rare legislative victory on a major lame-duck session item that saw most other major items raised as possibilities going into or during the lame-duck legislative session die. Senate Majority Leader Arlan Meekhof (R-West Olive) called it one of the lamest lame ducks ever. The final day of session passed with no last-minute surprises.
The final three weeks saw majority House Republicans and majority Senate Republicans scuttle several of each other’s more notable bill packages, like toughening voter identification laws, codifying the Citizens United campaign finance ruling into Michigan Campaign Finance Law, a broad package of criminal justice changes, tax incentives for economic development, expanding freedom of information laws to the governor and Legislature, ending paid time for public union representatives and more. Big ticket items like overhauling teacher pensions and local government retiree health care faltered without going far.
Snyder said he would like to see bills on items such as public-private partnerships, economic development credits and criminal justice return in 2017 when the 99th Legislature convenes.
“So there’s more work to be done, but that’s traditional every lame duck,” he said.
Final passage from the Senate came 19 hours after a tentative framework of a deal came together late Wednesday between the state’s major utilities, Consumers Energy and DTE Energy, and those advocating greater customer choice – two groups long at odds on energy legislation.
It was the issue that dominated the 98th Legislature and it wrapped up action on the final scheduled voting session day of the 2015-16 term. And for an issue that produced tremendous division within the majority Republican caucuses, it sailed to final passage mostly without major criticism. Groups from across the spectrum – utilities, choice advocates, environmental groups – praised the legislation.
Late Wednesday afternoon, there was word that a meeting between the utilities and choice groups went poorly and the questions about whether the effort on energy could fail began to grow. But about 11 p.m. Wednesday, the Legislature in its 13th hour of session that day, word began to spread of a tentative and fragile agreement brokered by Mr. Snyder.
Snyder was asked what changed.
“We changed the question in some ways,” he said. “Part of it was coming up with amendment ideas that people hadn’t thought about before, that sort of addressed and put in a good balance to say with respect to choice people and with respect to people from the regulated side, we found a way to bridge that gap. We presented it. It took a lot of time and effort to craft the words the right way, but I think that was one of the keys, along with people being reasonable about saying there has to be give and take on a number of features.”
WHAT THE BILLS DO: The approved versions of SB 437 (passed 79-28 in the House and concurred 33-4 in the Senate) and SB 438 (passed 76-31 in the House and concurred 33-4 in the Senate) would put in place strict parameters as to how the Public Service Commission would calculate the charge alternative electric suppliers would pay Consumers or DTE if they did not reach a contract with an entity to supply them with power to sell to their customers. The Senate-passed legislation alarmed suppliers because it gave the PSC virtual open-ended ability to determine that charge.
The PSC could choose between levying that charge or using a federal process.
The deal also drops Senate language that would have meant a minimum 4-year charge and maximum 10-year charge on customers of alternative electric suppliers.
The legislation could reduce the size of the choice market if those customers return in large numbers to utilities. If 10 percent of the choice customers, for example, returned to the utilities, then the cap on alternative electric suppliers’ share of the market could drop from 10 to 9 percent for six years if there were no additional customers in the queue to sign up for choice.
The legislation sets up a revised certificate of necessity process for utilities to win state approval of building new power plants or purchasing existing ones where anyone can intervene, a move that gained backing from choice backers. And another major provision requires utilities to submit integrated resource plans to the state showing five-, 10- and 15-year projections of their load obligations and plans to meet those obligations.
The legislation would increase the percentage of electricity utilities must generate from renewable sources from 10 to 15 percent by 2021. Utilities, once they reach 15 percent, could reduce the amount while explaining why that happened.
Those who currently generate their own power through the net metering program would avoid having to pay a charge to support the grid for the first 10 years, but there would be a study on the subject with the PSC later implementing a tariff no sooner than 18 months from the bill’s effective date on new net metering users.
The bill would set up a contested case system for the PSC to evaluate utilities’ plans to reduce energy waste and increase the incentive to utilities for reducing waste, though the final version is a bit less of an increase to the incentive. The incentives would rise with the greater amount of efficiency, with the incentive ranging from 25 percent to 30 percent.
Snyder said he anticipated several requests to build new plants as a result of the legislation.
“This is going to be a huge upgrade,” he said. “We’re going to move from a bunch of coal plants that are relatively dirty from an environmental point of view, that are near the end of their useful life or are at that end of life that would require untold investment to try to upgrade them … take those offline and replace them with natural gas fired plants that are cleaner and better and more efficient and/or renewables.”
SB 437 passed 79-28 with seven Democrats voting no alongside 21 Republicans. SB 438 passed 76-31 with 24 Republicans voting no and the same seven Democrats opposed. With 40 and 37 Republicans voting yes on the two bills, respectively, House Republicans maintained their rule of having 31 of their 61 members support legislation for it to come up for action.
Republicans voting no SB 437 were: Rep. Aaron Miller of Sturgis; Rep. Tom Barrett of Potterville; Rep. John Bizon of Battle Creek; Rep. John Bumstead of Newaygo; Rep. Ed Canfield of Sebewaing; Rep. Lee Chatfield of Levering; Rep. Triston Cole of Mancelona; Rep. Ben Glardon of Owosso; Rep. Gary Glenn of Midland; Rep. Ken Goike of Ray Township; Rep. Tom Hooker of Byron Township; Rep. Gary Howell of North Branch; Rep. Martin Howrylakof Troy; Rep. Tim Kelly of Saginaw Township; Rep. Ed McBroom of Vulcan; Rep. Paul Muxlow of Brown City; Rep. Philip Potvin of Cadillac; Rep. Amanda Price of Park Township; Rep. Jim Runestad of White Lake; Rep. Pat Somerville of New Boston and Rep. Lana Theis of Brighton.
On SB 438, Mr. Canfield and Mr. Muxlow switched to yes and Republicans Rep. Ray Franz of Onekama; Rep. Tom Leonard III of DeWitt Township; Rep. Michael McCready of Bloomfield Hills; Rep. Klint Kesto of Commerce Township and Rep. Jim Tedder of Clarkston voted no.
The seven Democrats voting no on both bills were: Rep. Scott Dianda of Calumet; Rep. Jeff Irwin of Ann Arbor; Rep. John Kivela of Marquette; Rep. Lauren Plawecki of Dearborn Heights; Rep. Harvey Santana of Detroit; Rep. Sarah Roberts of St. Clair Shores and Rep. Robert Wittenberg of Oak Park.
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