LANSING – Though the Michigan House Energy and Technology Committee only started discussions on one of the bills in a package to implement renewable energy standards and conservation programs for state electric and natural gas utilities, committee Chair Rep. Frank Accavitti Jr. (D-Eastpointe) said he expects to see the bills begin to move next week.
Accavitti told Gongwer News Service after the meeting that the workgroups he had charged with developing the legislation had run their course and it was time to move the bills, most of which were introduced earlier this week, into the full committee.
But he said during the meeting that there will still be more work on the package.
“This is not the end; this is not the beginning of the end; perhaps this is the end of the beginning,” he said.
In addition to any work to resolve issues his members might have, Mr. Accavitti will also apparently face efforts to resolve his vision of the state’s utility market with that of Sen. Bruce Patterson (R-Canton), chair of the Senate Energy Policy and Public Utilities Committee. Mr. Patterson introduced Wednesday his long-awaited long-term energy policy legislation (SB 947 )./p>
The House committee spent its meeting Wednesday discussing HB 5525 , which would require utilities to either implement or participate in an energy efficiency program. The bill requires utilities to set, and meet, goals for reducing their load and allows them to include the costs of those efforts in the rate base.
If utilities are able to reduce their load sufficiently, they are allowed to charge some of their administrative costs as a separate fee, decoupled from the volume of power sold.
Though the proposal would push utility bills up some initially, sponsor Rep. Kathy Angerer (D-Dundee) said those customers participating in the efficiency programs could see their bills come down more than the efficiency program surcharge because they are using that much less power.
She said a key to the program is that it be cost effective: the cost of the program must be able to be offset by energy savings. The Public Service Commission would be charged with determining whether it meets that standard.
The bill would apply to municipal utilities, but they would only have to report their efficiency plan to the PSC, not seek its approval. The utility’s board would be charged with ensuring it meets the targets for load reduction.
The committee has the rest of the package (HB 5520 , HB 5521 , HB 5522 , HB 5523 and HB 5524 ) on its agenda for Thursday, but is expected to concentrate on creation of a renewable power portfolio standard for the state, which would require electric utilities to obtain certain percentages of their power from such sources as wind and hydroelectric.
But the package shows a divergence between the two chambers on how to address the state’s energy needs. The House package would, after 90 days from its enactment, end the ability to enter electric choice programs. The bill (HB 5524) also restricts the ability of customers to return to regulated rates.
Under HB 5523, utilities could implement proposed rate increases within 90 days of filing if the PSC has not issued a final order on the proposal, though the utility would have to refund any overcharges if the PSC finally approves a lower rate. And utilities could file a new rate case every nine months.
HB 5522 would require that utility rates be based on the cost of service, ending any cross-class subsidies in rates. The rates could take into account differences in power cost by time of day and time of year and a customer class’ ability to move its use to off-peak periods.
But the bill would allow the PSC to adopt special contract rates to attract commercial and industrial customers to the state.
Utilities would be able to obtain pre-approval for building a power plant or entering a long-term power purchase agreement under HB 5521 including pre-certification that the PSC will allow the plant or contract cost to be added to the rate base.
But utilities would not be able to sell a generating plant if the PSC finds the sale would adversely affect rates or power supply to the utility (HB 5520).
Patterson, in contrast, explicitly retains electric choice, though requiring both utilities and alternative providers to have generating capacity or power contracts sufficient to provide a 15 percent planning reserve margin. And they must show by January 1 that they have sufficient power to meet peak loads expected in the summer.
The plan also requires some of that power come from renewable sources. The requirement increases from 3 percent for 2008 to 10 percent after December 31, 2015. The PSC could order that increased to 20 percent in 2025.
The renewable standards could be met through ownership of the generation, through power purchase contracts or through a credit program to be established by the PSC. And utilities would be able to recover any reasonable additional costs of meeting the standard.
A provider that has planned to meet the standard but shows it will not, in the end, have enough power from renewables is excused for the remainder of the year. But simple failure to comply will mean fines of up to $50 per megawatt hour that should have been generated from renewable sources.
Utilities that do need to build a plant would be able to obtain a certificate of need from the PSC that would prevent rate increases based on the cost of the plant from being challenged based on the need. The certificate also would supercede local zoning in citing the plant. But the utility would have to competitively bid design and construction of the plant.
The cost of the plant could also be passed to customers that choose an alternative supplier after the PSC issues the certificate of need for the plant.
All electric customers would also pay a surcharge for the Michigan Energy Efficiency Program that would be administered by a private contractor hired by the PSC. The program would provide incentives for customers to adopt energy efficient practices and appliances.
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