Battle Creek Enquirer Column: Hold Utilities Accountable for Renewables, Waste
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Battle Creek Enquirer Column: Hold utilities accountable for renewables, waste http://www.battlecreekenquirer.com/story/opinion/columnists/2015/09/11/hold-utilities-accountable- renewables-waste/72091532/
Families and businesses know it all too well: Michigan has the highest electricity costs in the Midwest.
High electricity bills hamper investment and job creation and mean families are spending more of their hard-earned money just to keep the lights on.
Michigan’s energy policy is at a crossroads this year. In a state where our energy market is nearly fully regulated, it’s the responsibility of legislators to hold utilities accountable for keeping utility costs low. Michigan legislators have a real opportunity to rein in rising costs and protect ratepayers by increasing our renewable energy and energy efficiency standards.
One of the reasons that our electricity costs are high is that current law provides incentives for utilities to invest in capital and build large plants. They’re guaranteed generous profits on these investments — and simply pass along the costs to ratepayers.
As Michigan’s old, inefficient coal-burning power plants close down over the coming years, we must replace them with a combination of renewable energy, natural gas and an aggressive effort to reduce energy waste. This “all-of-the above” approach will reduce costs while creating jobs and protect our air, land and water.
It was only after state Legislation was passed creating standards in 2008 that Michigan utilities implemented any energy efficiency programs and began acquiring wind and solar energy. If Michigan truly wants to diversify our energy portfolio and reduce electricity costs, the Legislature must increase our energy efficiency and renewable energy standards.
Gov. Rick Snyder is a champion of reducing energy waste, calling for 15 percent savings by 2025. Michigan’s current energy efficiency standard has saved ratepayers billions of dollars, and investments in energy efficiency will continue to pay dividends into the future.
Prior to having an energy efficiency standard, utilities failed to offer programs that help ratepayers reduce energy waste. Why? Because utilities profit more by selling more electricity.
Energy efficiency simply goes against the business model of utilities, which is why the Legislature must hold them accountable and ensure families and businesses have access to programs that can help them save money.
Michigan’s current renewable energy standard has made significant progress in diversifying our energy portfolio. Since the law was passed in 2008, the cost of renewable energy has declined dramatically. Wind contracts are coming in at a fraction of the costs from several years ago, making wind a low-cost energy option. Advances in technology have reduced costs of solar energy by 50 percent in recent years.
What’s best about renewable energy is that these new, low rates are often locked into 20- to 30-year contracts — guaranteeing low costs electricity for ratepayers for decades. This type of guarantee is nonexistent when it comes to natural gas. Michigan is now home to more than 240 companies that are manufacturing, installing and servicing renewable energy systems like wind and solar, which means we’re creating Michigan jobs and spending less money importing coal from other states.
By increasing the renewable energy standard, the Michigan Legislature can ensure utilities use more clean, competitively-priced renewable energy. That means savings passed along to customers, not guaranteed profits to shareholders.
Policymakers must hold utility companies accountable with clear policy standards for reducing energy waste and for using more cost-saving renewable energy to ensure rein in rising electricity costs for families and businesses across our state.
MLive: Gary Wolfram: Electric regulation must move Michigan toward renewables, efficiency http://www.mlive.com/opinion/index.ssf/2015/10/michigan_electric_regulation_m.html
Michigan's regulated electric utility market can be significantly improved. An open market should be the goal, but it will require overcoming significant political and economic hurdles. In the meantime, lawmakers should enact legislation that creates incentives for utilities, consumers and entrepreneurs aligned with goals to use less energy, lower costs and transitions the state toward generation from cleaner sources and more efficient sources, including renewables.
Michigan currently has the highest electricity costs in the Midwest (nearly 25 percent higher than surrounding states), and the 14th highest in the nation. It's a problem that impacts every Michigander – because we all use and pay for electricity.
Do these higher rates end up with greater reliability and efficiency? The simple answer is no. Michigan's regulated utilities fail to provide better service and don't meet higher environmental standards than surrounding states.
For technological reasons that were in effect a century ago, the electric industry developed as a regulated monopoly. Today, it is possible and desirable for the industry to be a competitive one. As monopolies, utilities will not respond to the marketplace in the same way as Google or Whirlpool. It is in a monopoly's interest to protect profits and access to customers, creating significant barriers to innovation. Legislation is required to ensure a more efficient allocation of resources that better serves ratepayers.
The Legislature is currently discussing ways to address Michigan's regulated utility market and there are several ways to improve performance:
1. Spark innovation through market access. With guaranteed profits and market share, Michigan's utilities have inherent competitive advantages and economic incentives that keep entrepreneurs and innovators from accessing customers. Opening market access will allow businesses to develop beneficial, cutting-edge energy innovations such as advances in the generation of electricity from renewable sources, smart grid technology and improved-efficiency products and systems.
2. Allow consumers to purchase renewable energy. Just as some consumers would rather purchase organically grown, there are consumers who would rather purchase energy produced from renewable sources. As technological improvements continue to drive down the cost of renewable energy, ratepayers should have a choice in how their electricity is generated.
3. Encourage consumer efficiency. Utilities are in the business of selling electricity — meaning they have few incentives to help their customers buy less of it. Few companies tell their customers: "Here is how to purchase less of our product." By requiring efficient pricing, setting incentives for efficiency and helping customers understand their usage, we can encourage more efficient consumption and bring down costs.
The current structure of Michigan's regulated electricity industry results in inefficient use of resources, higher prices for electricity and reduced economic activity due to inherently misaligned incentives for both producers and consumers. Until a deregulated market in Michigan is politically feasible, state legislators can protect ratepayers by passing regulations that properly align utility incentives with desired performance.
While conservatives are traditionally reluctant to support rules on businesses that interfere with their operations, in a closed market, such as Michigan's legislative-created electricity market where utility profits are guaranteed, it is necessary to enact legislation to overcome the disincentives of the current system, thereby reducing costs for Michigan ratepayers and improving our economy.
Macomb Daily: Governor Snyder's plan for clean power makes good business sense http://www.macombdaily.com/opinion/20150923/governor-snyders-plan-for-clean-power-makes- good-business-sense
The recent announcement by Governor Rick Snyder that Michigan will create a state-based clean energy plan to comply with the Environmental Protection Agency’s Clean Power Plan is a step in the right direction for our clean energy future. While Michigan’s state political leaders still have the task of developing legislation that is fair and supportive of Michigan’s growing solar industry, this news is very encouraging. I’m proud of Governor Snyder for taking this bold step forward, as are other Michigan renewable energy business leaders with whom I work.
Michigan already has a competitive advantage over neighboring states in achieving the EPA’s new standards. Michigan’s renewable power sector currently supports more than 6,000 jobs and renewable energy projects have drawn $2.2. billion in new investment to the state through 2013. With the development of a state implementation plan that includes greater use of distributed renewable generation, we can spur new investment, create even more jobs, and drive down electricity rates for consumers.
As president of a Commerce Charter Township-based wind and solar company, I’ve seen firsthand the rapid decline in the cost of renewable power. Solar installations today are about one third the cost of projects just eight years ago – and the cost of Michigan-made wind power has dropped 50 percent since contracts were approved in 2009 and 2010.
Back in 2007 when I started my company, I decided to enter the sector from an investment standpoint: it just made good business sense. Our company designs, sells, and installs solar electric and wind turbine systems and employs both full-time workers and subcontractors here in Michigan. As the cost of renewable power continues to go down, I’m excited to watch the number of jobs and the sector’s positive economic impact go up. I’m passionate about educating people about renewable power in Michigan because it translates to a good return on investment, and smart retirement planning by providing homeowners with fixed rate pricing. And as utility grid operators become more familiar with renewables, they also help with overall grid reliability. According to a report from the National Renewable Energy Laboratory earlier this year, wind and solar plants can improve power system operations, reliability and stability, while reducing carbon emissions by 30 percent or more.
Implementing the Clean Power Plan is good common sense, both from an environmental standpoint and an economic perspective. And developing an implementation plan that is “by Michigan, for Michigan” will further address our state’s unique energy needs as we move into the future.
Governor Snyder’s leadership on this issue is critical for our state’s economic future.
Low-cost renewable power can, and should be, a key part of any implementation plan. I look forward to working with our policymakers and other renewable energy business leaders in the state to turn our state’s renewable potential into a reality.
Mark Hagerty is the founder and owner of Michigan Solar and Wind Power Solutions, a renewable energy design, sales and solar installation company located in Commerce Township.
Midwest Energy News: Report: Efficiency standard saves Michigan ratepayers billions http://midwestenergynews.com/2015/10/05/report-efficiency-standard-saves-michigan-ratepayers- billions/
As state policymakers carry the legislative momentum to end Michigan's renewable and efficiency standards, a new report by the Michigan Public Service Commission shows that mandated efficiency investments since 2010 will save ratepayers billions of dollars.
The MPSC report released last week says every dollar spent on efficiency in 2014 resulted in savings of $4.38. Over the life of the program, utilities have spent $1.1 billion, which is expected to create lifetime savings to all customers of $4.2 billion.
“The cheapest energy is the energy never used, and this has proven to be the case again with Michigan’s energy optimization programs in 2014,” MPSC Chairman John Quackenbush said in a statement. “Because they focus on reducing energy waste, energy efficiency programs benefit all utility customers.”
Clean-energy advocates are pointing to the report as evidence of the standard’s success.
“It puts an exclamation point on the importance of continuing and expanding the energy optimization standard in PA 295,” said Martin Kushler, senior fellow with the American Council for an Energy Efficient Economy. “This so-called mandate is saving $4.38 for every dollar spent on the program. It’s accomplishing things the utilities were not doing on their own. It looks to me like the policy is working pretty darn well.”
Michigan’s energy optimization standard requires utilities to set up programs that meet efficiency targets on an annual basis — 1 percent of retail sales for electric providers and .75 percent of retail sales for natural-gas providers. According to the report, utilities hit 141 percent of their targets for electricity and 130 percent for natural gas. In 2014, the state saw electric savings of 1.4 million megawatt-hours, which the MPSC says is approximately 172,500 households’ annual electric usage. The average residential customer pays $1- $2 a month through an efficiency surcharge on their bill.
The report notes that hitting efficiency targets can be a hedge against building new generation.
“Over the long run, the cumulative reduction in customer demand for electricity is expected to result in the deferral or reduction in the need to build new electric generation plants,” the report says. “The avoided cost of the production or purchase of electricity, purchase of natural gas, and building new generation benefits all customers, whether or not they have directly participated in the EO program.”
Ending mandates
Still, proposed legislation in the House and Senate — where Republicans hold a majority and supermajority, respectively — would repeal or phase out the efficiency standard and essentially replace them with an Integrated Resource Planning process.
SB 438 would phase out the energy efficiency standard by 2019, while House Republicans’ proposal would repeal it.
Gov. Rick Snyder has not advocated for expanding the efficiency standard, but efficiency does play a central role in his energy plan released in March.
Last month, the director of the Michigan Agency for Energy testified before the Senate Energy and Technology Committee saying that the administration supports an incentive-based system for utilities who are make efficiency investments, which could be part of the Integrated Resource Planning process.
‘How — in the face of this kind of consistent results — can policy makers be thinking about eliminating this policy?’
However, Kushler noted that data taken from states across the country shows that clear standards are more effective at driving efficiency than an IRP on its own.
“We know from national experience that these types of standards save more than three times as much as states that don’t and rely on a voluntary process,” he said. “There’s just no substitute for good, effective policy like we have with energy optimization.”
Consumers Energy said it will continue to make efficiency investments regardless.
“The MPSC report validates Consumers Energy’s experience that our energy efficiency can deliver cost- effective value,” spokesman Brian Wheeler said. “Since 2009, our customers have experienced bill savings of more than $855 million through our energy-efficiency programs. They are also an effective way to help Michigan to attract and retain job creators that need to manage costs to stay competitive.
“Gov. Rick Snyder has identified the elimination of energy waste as a priority in Michigan’s next energy plan, and we expect to continue to offer energy-efficiency options in the future.” Lawmakers hope to finish work on energy legislation this fall and have a proposal before Snyder by the end of the year. Advocates are hoping legislators consider the proven success of the standards adopted in 2008.
“How — in the face of this kind of consistent results — can policy makers be thinking about eliminating this policy?” Kushler said.
Crain’s: PSC: Energy efficiency programs should save Michigan customers $4.2 billion
LANSING — The $257 million spent in 2014 by electric and gas utilities to reduce energy use should save customers at least $1.1 billion over the lifetime of the programs — a return of $4.38 for every $1 spent, according to a new report from the state’s energy regulatory agency.
The report from the Michigan Public Service Commission, new this week, says electric utilities saved 1.4 million megawatt hours of electricity in 2014, or enough to power 172,500 homes for a year. That’s up from 1.3 million megawatt hours the year before, enough energy to cover 121,000 homes’ annual electricity use.
Natural gas utilities saved more than 4.86 million thousand cubic feet of natural gas last year, or roughly 57,000 homes’ annual natural gas use. “The cheapest energy is the energy never used, and this has proven to be the case again with Michigan’s energy optimization programs in 2014,” said John Quackenbush, chairman of the MPSC, in a statement. “Because they focus on reducing energy waste, energy efficiency programs benefit all utility customers.”
The MPSC’s report was issued as the Legislature debates bills that would phase out the state’s energy efficiency mandate for electric utilities by January 2019 and replace it with a process called integrated resource planning when setting rates. (The standard would stay in place for natural gas.) Currently, utilities are required to reduce energy waste by at least 1 percent of their total electric sales.
Lawmakers, utilities and some large industrial companies believe the standard no longer is needed. Power companies say they will continue these programs on their own in part because customers demand them.
Some environmental and business groups, including Michigan-based appliance giant Whirlpool Corp., disagree. They argue the body of evidence — including the MPSC’s own reports — prove the mandate has led to actual savings and should be maintained.
The MPSC said utilities’ investment of $1.1 billion on energy efficiency programs from 2010 to 2014 should save customers $4.2 billion over the lifetime of the programs.
They include such things as rebates on lightbulbs or other energy equipment and home weatherization.
The MPSC estimated the cost of both the state’s energy efficiency and renewable energy standards — the latter of which requires 10 percent of utilities’ power to come from renewable sources by this year — is $37 per megawatt hour. That’s roughly 28 percent of the estimated cost of a new coal plant, at $133 per megawatt hour, the MPSC said.
That’s also less than any other generation source, including natural gas combined-cycle plants, according to the MPSC.
“Renewable energy and energy optimization continue to be cost-effective resources in the state of Michigan,” the agency wrote.
Sam Gomberg, lead Midwest energy analyst with the Union of Concerned Scientists in Chicago, called Michigan’s efficiency standard “the biggest no-brainer of the bunch” and said nothing short of a guarantee would ensure the utilities hold true to their promise of continuing such programs.
“The argument just doesn’t really hold water,” Gomberg said. “They’re in the business of selling electricity. Selling less electricity is really not in their business model.
“The push to repeal the standard just comes down to political ideology.”
The utilities, however, say they don’t plan to end such programs.
By the end of the year, Detroit-based DTE Energy Co. says it will have spent more than $600 million on energy efficiency programs. Irene Dimitry, DTE’s vice president of business planning and development, recently testified before a Senate panel that the company’s programs to reduce energy use have saved its electric and gas customers more than $500 million on their energy bills. Jackson-based Consumers Energy says it has saved its customers $855 million on efficiency programs. Spokesman Dan Bishop said programs including residential rebates and lightbulb incentives have been popular.
“Customers think well of energy efficiency,” he said. “It’s often talked about as sort of the cheapest source of new energy, if you will — the power plant you don’t have to build because you’ve been able to reduce energy waste.”
Bishop declined to speculate, however, on which programs might continue should the efficiency mandate be phased out, adding that the integrated resource planning process would determine that.
MLive: Michigan energy planning should not be rushed http://www.mlive.com/opinion/index.ssf/2015/10/michigan_energy_planning_shoul.html
Robert Kaslik is a retired executive of MichCon (Michigan Consolidated Gas, now DTE Energy), where he was controller and director of regulatory affairs. He is an AARP volunteer who lives in Washington, Michigan.
In testimony given on Sept. 17 regarding Senate Bill 437 before the Senate Energy and Technology Committee, David Mengebier, a senior vice president for Consumers Energy, listed a number of potential risks to Michigan's electricity market and stated: "It is imperative that we get a fair Michigan policy in place this fall."
Mengebier, who wrote an op-ed on this topic for MLive on Sept. 15, also stated that it would be inadvisable for new generating capacity developed under that policy to come from outside the state, implying that the Legislature should limit the options available to Michigan's utilities and, therefore, their customers under the Integrated Resource Plan process for new capacity, as proposed in S.B. 437.
Several points need to be made in response:
There is no need for a rush to judgment. According to the latest survey conducted by the Midcontinent Independent System Operator (MISO), there has been a significant improvement for 2016 requirements from the 2014 survey (from a 2.3 GW shortfall to a 1.7 GW surplus) "primarily due to an increase in resources committed to serving MISO load and a decrease in load forecasts."
MISO Executive Vice President Clair Moeller further stated, "However, it is important to note that more work remains to be done. While the near-term picture has improved, the longer term forecast requires continued vigilance to ensure there are adequate resources." Mr. Mengebier's fears seem to be an overreaction; there is time to thoroughly consider the bill's effects.
Michigan's retail electric residential rates are among the highest in the region. This is a burden for all Michiganders, but especially for the over-50 community — many of whom are on fixed incomes. A debate on how the bill's provisions are likely to affect Michigan utility customers' costs is essential.
Out-of-state power has been and must continue to be an essential part of Michigan's potential energy mix, even if only as an option. Flexible markets are essential if buyers and sellers are to have meaningful options. Restrictions on those markets that would exclude out-of-state bidders would reduce competition and increase costs to Michigan customers. Other states will benefit at Michigan's expense.
Consumers Energy shareholders' views were well represented by Mr. Mengebier. And that is essential. It is equally essential to hear directly from groups representing the people who will be paying the bills. The time schedule proposed by Mr. Mengebier would preclude that part of the discussion.
MLive: Michigan state agency installs solar panels, expects to save taxpayers $800,000 http://www.mlive.com/lansing-news/index.ssf/2015/09/michigan_state_agency_installs.html? utm_source=twitterfeed&utm_medium=twitter
The Michigan Agency for Energy is in charge of leading Michigan's energy future, and it's leading by example with solar panels and energy efficiency improvements.
The Michigan Agency for Energy, a relatively new agency, is organized under the Michigan Public Service Commission. Now it's the first energy agency in the nation to make improvements using Property Assessed Clean Energy (PACE) financing.
PACE allows state and local governments to fund the up-front cost of energy improvements on commercial and residential properties and be paid back by the property owners over time, according to the U.S. Department of Energy. The idea is to give property owners an incentive to make energy upgrades even though agencies renting the buildings pay for utilities themselves.
The improvements Michigan Agency for Energy paid for cost $437,000 but are expected to save taxpayers $800,000 over the next 20 years.
"Michigan's government is leading by example by actively seeking cost-effective ways to cut energy waste," MAE Executive Director Valerie Brader said at an open house showcasing the improvements. "It is only fitting that the state's energy experts demonstrate the effective use of multiple innovative tools to reduce our energy waste. The improvements made are expected to yield $800,000 in savings to the state."
Improvements include a 20-kilowatt solar array, electric vehicle charging stations, occupancy light sensors and upgrades to LED lights.
The MPSC moved offices in 2014 and approached the property owner at 7109 W. Saginaw Highway about the PACE financing. They worked with public-private partnership Lean and Green Michigan and national energy service contractor Ameresco to plan and make the improvements.
Crain’s guest blog: Don't keep state mired in past with GOP energy bill http://www.crainsdetroit.com/article/20150927/BLOG200/309279987/dont-keep-state-mired-in-past- with-gop-energy-bill
A century ago, Michigan's economy was exploding: auto industry soaring; people flocking here; new factories, housing, and businesses sprouting. America wanted cars, Henry Ford made them cheaply, and his innovative assembly line made us the Auto State and Motor City.
Today, the world wants solar panels and wind turbines, and Michigan's peerless manufacturers could make us the Clean Energy State, with many thousands of new, high-tech, high-paying jobs. But not without a strong, permanent home market: Ford would have failed in Michigan if his market were Iowa.
That's why Lansing's Republican senators must revise their awful energy bill, SB 438, which erases the bipartisan 2008 renewable standards that created Michigan's renewables market and renewables assembly lines.
Permanently bringing truly big-time clean energy industry home to Michigan requires market certainty. Without it, we cede opportunities to competing states that are sticking with standards. Standards, which Democrats support, provide that certainty and challenge our un-innovative utilities to dump stale business models that remain profitable only because they are monopolies.
What would have happened if Lansing had kowtowed to the horse-and-buggy industry and refused to fund road paving and traffic lights? With just 4,000 autos on the road, 21 million horses available, and buggies costing just $20, Ford and his contemporaries needed not only effective assembly lines, but also supportive infrastructure.
Given the modesty of our 2008 standards (opponents call them "mandates" because it sounds scary) — 10 percent renewables by 2015, 1 percent annual efficiency gains, limited net metering — our initial, impressive renewables manufacturing success reflects Michigan's potential to be a true giant if state policies go big, rather than disappear.
Consider: According to the American Wind Energy Association, close to 4,000 Michiganians made wind turbine parts in 2014. Yet Iowa, which has little manufacturing heritage but four times as many turbines, has twice as many wind jobs. And according to the Solar Foundation, 2,100 Michiganders had solar jobs in 2014, yet Massachusetts, hardly a sunshine or manufacturing state, has 14 times more solar installations and nearly five times as many jobs.
The difference is not wind speed or sunshine; it's those states' renewable standards.
But utility lobbyists are telling Lansing conservatives that making utilities stick to a clear, required statewide clean energy plan is bad. Their bogus warnings against "cookie-cutter solutions," "choosing winners and losers" and "unfair subsidies" avoid this truth: They are attacking standards because they work so well.
Eventually, new technology wins: Autos did eliminate horses and buggies. Wind and solar power will replace coal, natural gas, and centralized-only power generation. But will Michigan cash in?
Without clear clean energy standards, and even with Gov. Snyder's wise cooperation with the EPA's Clean Power Plan, Michigan could get stuck behind a slow buggy, allowing more states to roar past us.
Gov. Snyder's own studies confirm that Michigan could affordably do much more than the CPP's minimum in moving to clean, renewable energy. True leaders don't do minimums; they see how far they can go. Just ask Henry.
Midwest Energy News: Indiana watchdogs: ‘Our fears are coming true’ on utilities and efficiency http://midwestenergynews.com/2015/09/24/indiana-watchdogs-our-fears-are-coming-true-on-utilities- and-efficiency/
More than a year after Indiana lawmakers repealed the state's energy efficiency standard, utilities are scaling back their efforts while – advocates argue – seeking to overcharge ratepayers for their plans.
Last year Indiana passed legislation eliminating the state’s Energy Efficiency Resource Standard (EERS) and also killing its Energizing Indiana program, which had led to substantial energy efficiency investments and energy savings.
To replace the EERS, the legislature passed Senate Bill 412, calling for utilities to file energy efficiency and demand side management (DSM) plans with the state utility commission every three years.
Now Duke Energy Indiana and NIPSCO (Northern Indiana Public Service Company) have filed these plans for 2016-2018 with the Indiana Utility Regulatory Commission. And the Citizens Action Coalition of Indiana (CAC) watchdog organization says the proposals show just how inadequate the new requirement is, especially compared to the sizable efficiency improvements that were being made before.
For example, NIPSCO’s proposed energy savings in 2018 are 114 GWh. Under the EERS, they would have had to save 339 GWh. Natalie Mims, an expert witness who testified on behalf of CAC before the utility commission, said that NIPSCO’s proposed spending on energy efficiency in 2016-2018 is only 40 percent of its 2014 spending.
“Our fears are coming true or being confirmed,” said CAC executive director Kerwin Olson. “The legislation allows the utility companies to establish their own goals. It puts the utilities in the drivers’ seat in terms of how much energy efficiency they’re going to do.
‘It’s widely accepted and understood that energy efficiency requires policy to drive the investment.’
“But it’s widely accepted and understood that energy efficiency requires policy to drive the investment; that energy efficiency is not in the utility company’s best interest and in order to drive utility companies to invest in efficiency you need a little bit of a stick behind it.”
Both the CAC and the Indiana Office of Utility Consumer Counsel (OUCC), a governmental agency, are calling on the commission to reject Duke’s and NIPSCO’s plans and demand they be revamped to include greater energy efficiency and conservation measures.
Overcharging and opting out
While the CAC laments how the utilities are not bolstering energy efficiency, testimony filed by the CAC and the OUCC complain that Duke and NIPSCO are also trying to charge ratepayers too much for “lost revenue” that the company expects because of lower demand.
Utilities are allowed to recoup revenue they lose because less energy is purchased after efficiency measures are taken. But the testimony says that the utilities want to charge way too much for such lost revenue, and that their plans are causing many large industrial customers to opt out of the energy efficiency program altogether. Duke and NIPSCO did not respond to questions or requests for comment for this story.
A group of industrial customers filed testimony in the NIPSCO case charging that the amount NIPSCO is trying to gain through lost revenue “substantially exceeds” the money it would lose due to electricity conservation.
NIPSCO wants to collect $72.7 million in lost revenue, which makes up more than half its DSM program’s total budget. Duke’s plan proposes to collect $77.6 million in lost revenue for 2016-2018, making up 40 percent of the DSM budget.
The legislation that ultimately ended the EERS started out as a much narrower provision meant to give industrial customers the right to opt out of energy efficiency programs. This remains an option, even though the energy efficiency programs are much less ambitious going forward. Opting out can free industrial customers from paying the lost revenue charges that they say are way too high.
The CAC’s testimony argues that while utilities are required to give industrial users the choice of opting out, they should try harder to convince those users to stay involved in the program.
“The Company should modify the language to focus on the benefits the customer is declining when it opts out of efficiency programs,” said Mims in her NIPSCO testimony. “Currently, the language focuses on the ease with which the customer can opt out of the program.”
Almost half of the industrial customers eligible for opting out have done so, according to the CAC.
‘The utility feels like it is upon them to make opt-out as easy as possible.’
“The opt out forms the utilities are using are just pathetic,” said CAC attorney Jennifer Washburn. “We joke that the industrial customer just has to whisper the word ‘opt-out’ and they’re done. The utility feels like it is upon them to make opt-out as easy as possible. And good luck getting any big guys to participate in any of these programs with lost revenues [they must pay the utility] so out of control.”
OUCC utility analyst Edward Rutter’s testimony indicated that the amount Duke seeks to recover from ratepayers as compensation for lost revenue is disingenuous. He noted that if Duke had to build a new power plant to serve customers instead of simply reducing electricity demand, it would have massive costs up front with slow recovery and the risk that the plant would not be financially viable.
“Duke faces no disincentive,” to invest in reducing demand, Rutter’s testimony says. “Instead, the opposite is true.”
Lack of data
Both the OUCC and CAC comments criticize Duke for not providing data to show how much revenue they will be losing because of energy efficiency improvements.
Among other things, they say the company has a seriously inflated number for how much it will spend on “energy measurement and verification,” or EM&V, for its demand side management programs. Such measurement and evaluation usually costs about five percent of the total program cost, Olson said. In testimony for the OUCC in the Duke case, utility analyst April Paronish noted that Duke’s former CEO, James Rogers, chaired a public-private initiative that recommended EM&V should make up three to six percent of the overall DSM costs.
Duke proposes instead to spend about nine percent of its total DSM program costs, or $9 million a year, on EM&V.
“EM&V is incredibly important –we strongly support it,” said Olson. “But Duke’s budget for EM&V is outrageous. If it costs that much to evaluate a program, something is wrong. Either the number is inflated or there’s an inherent problem in the design of program. Either way, that budget is absurd.”
Paronish’s testimony notes that Duke proposes to reduce the rebates it pays consumers for replacing inefficient appliances, from $50 to less than $30, with no explanation.
“There is no information explaining the decrease, how many customers are expected to participate or why [Duke] believes this new amount will be sufficient to motivate participation after providing $50 rebates,” Paronish testified.
Olson said that CAC has been fighting for data that sheds light on Duke’s proposals, through Freedom of Information Act requests. But citizens shouldn’t have to go to that length to get data the company should have included in its public filings before the utility commission, Olson said.
Rutter testified that if the company wants to recoup costs for energy efficiency programs and incentives, it should have to provide a cost-benefit analysis of what it is proposing.
‘Is it reasonable to award performance incentives to a utility that sets it own savings targets?’
Rutter also questioned the concept of Duke receiving performance incentives for meeting the goals that it sets for itself. Performance incentives are a standard way to ensure that utilities meet energy efficiency targets, but those goals are less meaningful when set by the utility itself.
“Is it reasonable for the Commission to award performance incentives to a utility that sets it own savings targets?” Rutter asked.
In the CAC’s testimony regarding NIPSCO, Mims notes that among other problems, NIPSCO wrongly quantified the value of supply side and demand side resources in the same way, which does a disservice to energy efficiency or other demand reduction programs.
“A single program targeting residential lighting, for example, may not defer or displace a generating unit, where a comprehensive portfolio of programs including residential lighting would,” Mims testified.
Other demands
The CAC’s testimony also makes other requests of Duke and NIPSCO, in part to restore programs that were included in Energizing Indiana. The CAC asks that the utility make it explicit that single-family manufactured homes qualify for energy efficiency programs. The CAC asks that Duke and NIPSCO offer a $1,000 rebate for people buying manufactured homes certified as efficient, and that real estate agents get a $200 bonus for making such sales.
“Given the amount of Indiana’s housing stock that is comprised of manufactured homes and the use of manufactured homes as affordable housing, it is critical that NIPSCO design successful programs to reach this market,” Mims said in her testimony.
The CAC also asks Duke and NIPSCO to include incentives for efficiency in new home construction, since some important efficiency measures like quality insulation are typically only done during construction.
The CAC also asks Duke and NIPSCO to revive a schools program that previously existed, known as School Audit and Direct Install (SADI) that includes LED exit signs, occupancy sensors for power strips and whole classrooms, vending machine timers and other energy-saving measures. In 2014 that program saved 547 net MWh.
A silver lining?
When Energizing Indiana was still in place, utilities were required to enlist independent auditors to develop action plans for improving energy efficiency. The CAC’s testimony includes charts showing how much lower the utilities’ proposed energy efficiency goals are compared with the action plans that had been formulated under the old rules.
For example, Duke’s proposed goal calls for saving 196 GWh, or 0.6 percent of sales, in 2018. The action plan had called for saving 445 GWh, at 1.6 percent of sales. Those action plan numbers are adapted to reflect the industrial customers opting out of the program; with fewer opt-outs, the energy savings could be even greater.
For 2016-2018, Duke’s proposed goal for low-income energy efficiency programs is 9.7 gross GWh, whereas the action plan called for 50.8 gross GWh. For appliance recycling, the plan was 40 GWh compared to just 2 GWh in the proposed goal.
Washburn noted that the Energizing Indiana program was developed in part by the utility regulatory commission, and she is hopeful that the commission could still try to hold utilities to their previous action plans, which can be even more ambitious than the now-defunct EERS.
“All that’s required under Senate Bill 412 is that [the proposed goal] has to be reasonably achievable,” and in keeping with the company’s integrated resource plan, she said. “We’re saying what’s reasonably achievable is what the action plan said they could do.
“We hope the commission will be proud enough [of what they had accomplished before] to make lemonade out of these horrible lemons we were given,” Washburn continued. “The silver lining could be if the commission says they have to follow these independent action plans, we might get something that looks really good.”
Grand Rapids Press: Saving energy to save money and create jobs in Michigan http://www.mlive.com/opinion/grand- rapids/index.ssf/2015/09/saving_energy_to_save_money_an.html
Renae Hesselink is the vice president of sustainability at Nichols in Muskegon, Mich and Keith Winn is the president of Catalyst Partners in Grand Rapids, Mich. Keith is a founding member of the U.S. Green Building Council and both are founding members of the U.S. Green Building Council West Michigan chapter.
By Renae Hesselink and Keith Winn
Michigan has always been home to great, skilled workers, and our natural environment is the envy of the world. For too long, many have seen protecting both as competing interests. But we got promising news recently when Gov. Rick Snyder announced that the state will develop a strategy to meet the new standards in the Clean Power Plan, an ambitious but manageable rule from the U.S. Environmental Protection Agency to reduce carbon pollution.
The Clean Power Plan limits, for the first time, the amount of carbon pollution power plants may emit. While the automotive industry has done its part to reduce carbon emissions from cars, the power plants that fuel our homes, businesses, and schools have yet to catch up. Each state is tasked with developing a strategy for meeting the carbon reduction standards. Gov. Snyder is the first Republican governor to voice support for the plan, and by doing so, Michigan has the potential to be a leader in the energy industry and create more good-paying jobs.
Improving efficiency is the cheapest and cleanest way to use less energy, so we encourage Governor Snyder to incorporate energy efficiency initiatives in the plan to meet the Clean Power Plan standards. Seventy-five percent of energy produced in the United States goes just to operate buildings. There is significant potential in this area to decrease overall dependence on power plants by lessening the amount of energy buildings use. By reducing the strain on power plants, we can reduce carbon pollution and save money.
An implementation plan with a strong energy efficiency component would cater to our state's unique advantages. As fourth in the nation in LEED-certified building, Michigan is already a leader in a growing field. Investing in more green building, through tax credits, grants or loan programs, would take us far in reducing our overall energy demand.
Around our state, builders have been retrofitting structures and creating new construction with more energy efficient systems to great success. For example, a former automotive parts coating facility was recently repurposed as Rockford Construction's corporate headquarters on Grand Rapids' West Side. This 80,000 square foot daylight office building now uses 44 percent less energy. This has reduced energy costs by 45 percent, saving the building $40,000 on energy bills per year. Also, installing specific windows, mechanical equipment and insulation helped reduce capital costs and resulted in $150,000 in federal tax incentives.
In addition to economic benefits for building managers, investing in more green building helps create jobs that pay good wages, such as energy modelers, auditors and solar panel installers. Our state is filled with many former auto-manufacturing workers and the green building industry offers a real opportunity for those who retool technical skills for a new era. We also have the robust research capacity to develop new, innovative technologies to reduce dependence on power plants. By starting early, Michigan will have a clear advantage.
While state Attorney General Bill Schuette is opposed to the rule, Gov. Snyder's statement is a promising step for Michigan and we look forward to working with him and his team to develop a State Carbon Implementation Plan that incorporates more smart building strategies. By combining efficiency with measures to use cleaner power, Michigan can be a national leader in both boosting the economy and protecting the environment.
Bridge: Green energy saves money and generates jobs, so no need to change programs http://bridgemi.com/2015/09/green-energy-saves-money-and-generates-jobs-so-no-need-to-change- programs/
Sens. Mike Nofs and John Proos say in their Aug. 20 Bridge column that Michigan should control its own energy future. At the Michigan Environmental Council, we share that view.
However, it’s disingenuous of the senators to claim their legislation reflects the consensus viewpoint of the 37-member work group that met throughout the past year to put together such a strategy. MEC was part of that group, and it’s clear to us that Senate Bills 437 and 438 instead represent a very narrow point of view – one mostly in line with our electric utilities.
Their sweeping legislation would eliminate Michigan’s wildly successful renewable energy and energy efficiency programs. Doing so would put the brakes on job growth and cost residents billions over the next decade.
The senators justify their proposal with an ideological opposition to mandates, but it’s worth remembering that our utilities enjoy government-granted monopolies. It’s only fair that Michiganders get to set some ground rules for how the utilities make their guaranteed profits. We require them to trim trees around power lines and meet strict electric reliability standards. It is not unreasonable to require them to reduce waste and use affordable, homegrown power.
Besides, MEC is less interested in ideology than in results, and mandates work. A recent study showed that states with mandates achieve nearly four times the energy savings as states without them. Before Michigan’s 2008 efficiency law, our utilities – whose traditional business model is to sell more electricity, not conserve it – did next to nothing to prevent waste.
That’s important, because you can’t beat energy efficiency for affordability. Meeting demand by saving electricity costs only a third as much as building a new power plant. For every dollar invested in these programs, we save nearly $4. In 2013 alone, Michigan saved $1 billion through energy efficiency.
Nofs and Proos argue that a revised version of the Integrated Resource Planning process alone – in which the public service commission evaluates all utility options for meeting future energy demand – would render mandates unnecessary. Their IRP proposal could be an improvement to our current process, but only if coupled with efficiency and renewable standards. IRP without mandates is like planning a trip with a road map but no destination.
They plan to replace our renewable energy standard – which requires utilities to generate at least 10 percent of their electricity from renewable sources – with a meaningless “clean energy standard” and a voluntary “green pricing” program. By their definition, a coal plant from the 1950s would be considered “clean” energy. The voluntary renewable program, meanwhile, would allow the utilities to charge extra for renewable energy – which makes little sense, since renewables are cheaper than new conventional power generation.
Michigan’s renewable energy standard is a good thing for our people and economy. Since it was enacted in 2008, it has driven down the cost of generating power and delivered $2.9 billion in new investments in Michigan. It’s also been a big job creator; our state added 3,600 clean-energy jobs in 2014 alone.
Clean energy also has tremendous benefits for public health and our environment. In addition to helping to stabilize our climate, Michigan will avoid 1,900 premature deaths between 2020 and 2030 by meeting new federal carbon reduction requirements.
The senators’ legislation also would eliminate Michigan’s successful net-metering program, which allows customers to generate solar power at home and sell it back to the utility to reduce their electricity bills. It would require participants to buy all of their power from the utility at retail prices, and sell back what they generate at the lower wholesale rate. That works out nicely for big utilities, which have a financial interest in controlling as much of the state’s power generation as possible. But it’s bad news for the rest of us.
Rooftop solar improves reliability and controls electricity rates, because solar power is most plentiful during hours of peak electricity use. For the many benefits they provide, Michiganders deserve a fair rate for the pollution-free power they produce.
Like the senators, we see these bills as a starting point, and look forward to continuing to work toward policy outcomes that do what’s best for Michigan residents.