LANSING ? Michigan Public Service Commission Chair John Quackenbush is targeting 2015 as the right year for the state to update its energy policy last overhauled in 2008, he told Gongwer News Service in an interview, with the intent being to, ideally, set a path beginning in 2016.

In 2008, the state passed and then-Governor Jennifer Granholm signed a law that most notably gave Michigan a renewable portfolio standard mandating utilities to acquire at least 10 percent of their energy from renewable sources by 2015. It specifies biomass, solar photovoltaics and solar thermal energy, wind energy, hydroelectric power, geothermal energy and energy generated from landfill gas capture as potential sources of renewable energy, but also allows for 20 percent of the RPS to be met with cleaner energy technology.

The energy reform law also mandates energy savings in increments over several years and set competition in the state’s electric market to 10 percent of the state’s electric load for alternative energy suppliers while regulated utilities retained the obligation to serve the remaining customer base.

Virtually all aspects of the energy reform law except energy efficiency have been debated in the years since, and even after countless forums and at least two special messages by Governor Rick Snyder, continue to be debated in the Legislature. Utilities have met, if not exceeded, their renewable energy goals by now and many have begun to remove surcharges for implementing those changes.

It has been speculated that the state could stand to, at its current rate of growth, create a renewable energy standard that heads as far as 2030, but there has yet to be legislative action on the matter.

Quackenbush said he expects conversations to continue into the next year. Snyder recently told Gongwer that he hoped to announce his energy proposal during the first half of 2015.

“2015 is a natural year to ask the question of what more can we do? We feel confident we have a good 10-year window of being able to do energy efficiency,” he said. “To reset the standards, 2015 is the right time.”

He said the state has also been able to meet and exceed 2012 targets on energy efficiency on both the electric and gas side in terms of energy optimization. He said he did not think there would be any hurry to implement legislation in the coming year, “but we do want to get this done expeditiously.”

“I think we’re in a good place in the sense that we’ve gathered a lot of good information and we’ve had good preparation, I think, this year, so that perhaps we can do some good things in 2015,” he said.

Most discussion, Quackenbush said, has centered on combining renewable energy and energy efficiency into what is called a clean energy standard. He pointed to Sen. Mike Nofs (R-Battle Creek) – who will continue to be the head of the Senate Energy and Technology Committee next term – as having proposed the concept in some work groups Nofs has hosted. And Quackenbush said he would be on board with something to that effect.

“I think we can do more renewable energy build and more energy efficiency programs. They don’t have to be done through separate standards,” Quackenbush said, noting that doing so would give more flexibility and possibly be more cost-efficient.

The way renewable energy is currently defined in law could benefit from change, too.

“I think there’s ways to redefine that. I think that discussion should happen and will happen and is already happening,” Quackenbush said.

ELECTRIC CHOICE: Another point of discussion Mr. Quackenbush said he expects to get into in more depth over the next year is electric choice. Although the commission doesn’t intend to put out any orders about it, he said, the PSC has been and will continue to be a resource in the process.

“It’s also great timing because we have coal plant retirements coming in 2016 (when Environmental Protection Agency rules take effect),” Quackenbush said. “We’ve been kind of basking in this over-abundance of electricity available for several years now. Part of it was the weak economy and energy efficiency … which has led to us having a very comfortable reserve margin for electricity. We haven’t had to be really, really focused on capacity and where our next capacity is coming from. Now we will with coal plants being out of the way.

“Who is going to plan for capacity and who is going to pay for it will be key questions as the electricity market tightens up,” he said.

The federal EPA will also promulgate final rules by June next year, and once that comes out, the state will be forced to come up with a state plan that will involve all of its electricity-providing entities in the state, Quackenbush said.

On that note, Quackenbush said the PSC has asked all utilities and alternative energy suppliers to tell the PSC about their capacity plans, which should be submitted by mid-February. The commission has made a habit of asking for capacity plans since the 1990s, he said, but in recent years has asked for three-year-ahead information instead of one-year-ahead, and most recently, it asked for five-year information, “because we’re concerned about electric capacity,” he said.

“We know 2016 is a key year,” Quackenbush said. “It looks like everything is fine on the capacity front for 2015, but 2016 is the pinch. We want to see how that’s going to play out.”

As the EPA promulgates its rules on acceptable energy and emissions, Michigan will also have the opportunity to reduce costs by possibly partnering with other states, Quackenbush said.

“That will take a lot of work and a lot of analysis in 2015,” he said, noting that the state can get a one-year extension on having to meet the rules if it partners with other states. The feds expect to be focused on 2030 with some key parts of their rules relating to renewable energy and energy efficiency.

“It will mesh nicely with the things we’re doing in Michigan, but we have to make sure we’re in compliance with the EPA requirements,” he said.

The problem Michigan faces with EPA requirements is that some of its smaller, less-efficient plants face extinction under some of the expected rules (the EPA has already put out a draft report but is currently reading some 1.6 million comments on it, including those from Michigan, Quackenbush said). While some of those plants may be able to last for another five years or so, the future of others that might otherwise go away in the 2020s could be fast-tracked due to the regulations.

“We’ve asked the EPA to give us credit on early action. We also want more details on how it works,” he said. “We asked for clarification and more details to make sure we know what Michigan’s goals are for their plan and to plan appropriately (in state policy).”

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PROPANE-READY PLANS: Mr. Quackenbush also said the commission has taken an extra close look at the state’s propane supplies for this winter after an unusually cold winter last year required executive action by Governor Rick Snyder to more quickly get supply to the people.

“We’ve prepared well for this winter and continue to be focused on it,” he said. “Hopefully we won’t have the same challenges, but we’re ready for it if it happens that way.”

Mr. Quackenbush said a lot of the work the commission has done since last winter was to prepare the state for this winter should Michigan endure similar below-freezing temperatures. Most notably, the commission has been engaged in a “multi-agency effort,” he said, related to the transportation of propane in particular.

“I think we’re ahead of the game this winter,” he said. “We’re prepared for it.”