New Energy Proposal Sees Discussion

The Senate Energy and Technology Committee adopted several substitutes to the Senate’s energy policy proposals. These substitutes focus on the rules and regulations guiding utilities and their operations.

The two bills, SB 437 and SB 438, are not finalized according to chair Senator Mike Nofs (R-Battle Creek), but represent a solid foundation. Senator Nofs is focusing on four policy goals of reliability, shared responsibility of providing reliability and resources, ensuring there is not subsidization of energy prices for one group by another, and the creation of an integrated resource plan for cost-effective investments by utilities for ratepayers.

SB 437 outlines criteria on power supply cost recoveries and expands a Utility Consumer Participation Board (UCPB). Under this, the UCPB is allowed to make grants for rate cases as well as the interprocess communication (IRP) process. Further clarification on what cases the UCPB and the attorney general can intervene in will also be added. The certificate of need (CON) process is relatively the same, but the triggering mechanism dropped to $100 million from $500 million. CON will be maintained through December 31, 2018 when the IRP process will assume control.

The IRP will have a final stage approval process where any projects approved for the first three years have to be placed back out for bid to ensure the costs are reflective of the time it’s approved. This process is different than the automatic presumption that currently exists for such projects. SB 437 also includes resource adequacy, which is the ability to supply load during prime load and generation outage conditions.

The legislation maintains the 10 percent cap and grandfathering provisions for customers participating in electric choice. Customers who are 100 percent on retail open access will have an opportunity to allow for expansion to occur at an existing facility or adjacent facility for commercial customers as long as they own 50 percent of that adjacent facility. Customers can also leave and join as they wish. The commission will determine an appropriate generation capacity charge on any new customers after the legislation passes, but regulated utilities are still responsible for their capacity for 10 years.

SB 438 sets energy optimization standards and green pricing programs. It includes intricacies of cost recovery for investments and sets utility incentive standards that align with Governor Rick Snyder’s goal of energy waste reduction. It also establishes a 30 percent blended goal for utilities to meet by 2025. The 30 percent combines renewable energy and waste reduction, renewable energy including fuel that has been manufactured, in whole or part, by waste.

Utilities under this legislation will have green pricing programs, in which customers can request that their energy come specifically from renewable resources. The Public Service Commission will approve rates for the program, but the customer will be responsible for any additional costs. Energy efficiency programs will also be phased out.

Net metering is renamed distributive generation. The customer’s allowable size changes to 100 percent of the customer’s average annual consumption. The amount of distributed generation by an electric utility or alternative electric supplier is increased to 1 percent of peak state load from the preceding year or up to 10 percent of the average and peak loads for the preceding five years. Customers currently participating in net metering systems can continue to do so for the next 10 years.

posted by PAA Online , Friday, April 29, 2016 10:11 AM
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