By State Rep. Aric Nesbitt
Michigan is at a crossroads; generation capacity will be a major issue in the next few years, and several coal-fired power plants are scheduled to be shuttered by 2016 due to EPA regulations. With burdensome federal mandates that could dictate our energy decisions, Michigan families and job creators need a state policy that creates reliable, affordable energy. It is important that we establish a proactive energy plan that will ensure hardworking Michigan residents are not left in the dark.
As chair of the House Energy Committee, I have studied many policies and proposals throughout the country, which has resulted in a legislative proposal to put our state in the best position to produce the energy we need for the 21st Century. This proposal would focus on lower rates for customers and new investment in energy generation, while eliminating unnecessary fees and costly cookie-cutter renewable mandates.
This spring, I introduced House Bills 4297 and 4298 which allow for a broad approach in developing a sustainable, reliable energy policy for Michigan families. It includes several protections for consumers, such as ensuring the voice of residential ratepayers, eliminating unnecessary fees, and transitions to a new method of incorporating energy efficiency and cost-effectiveness through an Integrated Resource Plan (IRP). Elements added to this new IRP process will provide more transparency to ratepayers, while allowing utilities and regulators to better assess our energy needs for the future.
HB 4575, introduced by Representative Tristan Cole (R-Mancelona), would create the Michigan Electric Infrastructure Act. This act would establish the Michigan Electric Infrastructure Board to study and review the constraints on Michigan’s electric transmission infrastructure to help make the state more electricity independent.
Currently, Michigan operates under a “hybrid” system for purchasing electricity, where 10% of industrial and retail customers can choose to purchase power from an alternative electric provider, rather than a traditional utility like DTE Energy or Consumers Energy.
It is essentially an artificial market created for a select few within a regulated industry. The result is that 90% of Michigan ratepayers are on the hook for all the fixed costs of maintaining a reliable electric system, subsidizing the 10% who receive a special carve out. In addition to being unfair, it also creates uncertainty for all of us.
Certainty is crucial for producing affordable, stable electric rates. The range of prices are usually related to the certainty, or lack thereof, when it comes to building new, reliable generation plants. New plants (natural gas, nuclear, etc.) can cost up to $1 billion each, requiring large amounts of capital and certainty of return. DTE and Consumers are required to be able to produce 15% more than our expected peak electricity usage, which means the only way to have certainty is to operate in a responsibly regulated market.
This package of bills preserves the 10% Retail Open Access Market and provides safeguards against ratepayers subsidizing other ratepayers. These bills also secure long-term reliability of electricity for Michigan families by ensuring energy providers have the electric generation to fulfill our energy needs.
It is also imperative that we take a holistic approach to cleaner, more reliable energy, rather than the redundant piecemeal plans of the past, as we work towards efficiency and affordability. Using an “all the above” energy blueprint, we will incorporate several energy resources which emphasize a cleaner standard and will be more effective when it comes to producing the energy we need, while keeping costs low for hardworking families.
Use of newer, cleaner, and more efficient energy production is a key pillar in creating a Michigan plan for our energy future. This legislative proposal was recently approved by the House Energy Policy Committee, with strong bipartisan support. The vote comes after receiving testimony from over 100 individuals and over 35 hours of committee hearings covering a number of issues addressed in the package. As this legislation moves to the House floor, I plan to continue to work with my colleagues to ensure that we enact a plan that will benefit Michiganders for generations to come.
Michigan families demand a state energy plan that makes sense. It is important that we secure our energy future by moving away from a policy of special-interest carve outs and towards a policy of affordable, reliable electricity.
As always, please feel free to contact my office toll-free at (800) 577- 6212 or email me at AricNesbitt@house.mi.gov.