Michigan lawmakers could make changes to state energy policy that would help lower the cost of electricity here, state energy regulators said this week.
The Michigan public service commissioners issued a letter to Gov. Gretchen Whitmer on Monday outlining a suite of recommendations for legislative changes they say would improve energy affordability in Michigan. Their letter was written in response to her June request for such recommendations. Whitmer appointed all three commissioners.
“Affordability is always a top priority of the MPSC, and we’re committed to keeping energy costs reasonable even as we tackle the need to invest in modernizing and strengthening the power grid to improve reliability,” PSC Chair Dan Scripps said in a statement. “We look forward to working with partners in the Legislature, the Whitmer administration and others on ways the state can do more to bring down utility costs. The suggestions the Commission has outlined would help do just that, while also maintaining recent progress toward a more reliable grid.”
Political power is divided in Lansing, with Democrats holding the governor’s office and state Senate, while Republicans control the state House.
The recommendations come as energy affordability has become an increasingly fraught issue, with repeated requests for rate increases from the state’s major utilities contributing to the rising cost of living and people increasingly voicing concerns that data centers’ enormous demand for power will lead to shortages or skyrocketing prices.
A Detroit News analysis in January showed average electricity rates in Michigan have grown faster than inflation over the last 20 years and risen faster than averages in most other states.
While clean energy and affordability advocates largely supported the recommendations, one utility spokesman warned some of the ideas could “unintentionally undermine” efforts to lower bills and improve energy efficiency, foreshadowing challenges to adopting some of the ideas commissioners offered to Whitmer.
Ideas for lowering Michigan energy bills
Some of the commission’s first recommendations involved changing the pay structure for regulated utility companies, which are currently given an incentive to build new plants and grid equipment because they can charge their customers for the construction costs. Instead, lawmakers should require utilities to prove they are efficiently using their existing equipment before building anything new, the commissioners recommended. They said utility companies don’t efficiently use their grid equipment.
“Use more before you build more,” commissioners said in their recommendations. They pointed to a report from The Brattle Group, a financial consulting firm, that “suggests even a 10% increase in utilization could save more than $110-170 billion nationally over the next 10 years, reducing electric rates by 3.4%.”
The commissioners also recommended lawmakers write into law some of the conditions they’ve placed on utilities’ service contracts with data centers, such as requiring data centers buy a minimum amount of power, have stricter contract terms than other industrial power users and ensure costs of data center-related grid upgrades don’t fall to homeowners.
Other recommendations include:
Groups, utilities respond to commission’s ideas
Will Kenworthy, regulatory director of the Midwest for the nonprofit clean energy advocacy group Vote Solar, said he was “very excited” to see the commission’s recommendations.
“From our perspective, the highlights were just their focus on affordability in general and, like, spread throughout it there were different hooks into the policies for advancing distributed energy resources as a tool for achieving affordability and improving efficiency and optimizing the grid to achieve all those goals together,” Kenworthy said. “There was stuff about virtual power plants, there was stuff about grid utilization metrics. All that stuff is important to us and things that we’ve been talking about and working on for a long time.”
DTE Energy spokesman Ryan Lowry said company analysts are still reviewing the PSC’s recommendations, but said the company supports the goals of improving reliability and affordability and continues to work toward those goals.
“We’ve made real progress, but we know there’s more work to do in building a stronger grid for our customers,” Lowry said in an email.
Consumers Energy spokesman Matt Johnson also said the company supports efforts to improve reliability and affordability and said Consumers is investing in projects to reduce costs and upgrade infrastructure.
But Johnson warned that some of the commissioners’ recommendations “could unintentionally undermine those efforts.” He did not immediately respond to a request to explain which recommendations the Consumers staff believe pose problems or why.
“We will continue to work with the Commission and other stakeholders to ensure Michigan’s regulatory construct remains positive and that we continue to make progress on improvements to affordability and reliability in a way that works for all our customers,” Johnson said in an email.
The PSC’s affordability recommendations put the obvious flaws with Michigan’s energy system on display and show “we badly need reform,” said Ben Poulson, League of Conservation Voters state government affairs director.
But reform might be hard to achieve, he said, pointing to a package of laws stalled in the Legislature that would expand credits paid to customers affected by power outages like the one that cut power for hundreds of thousands of people in early July.
“It’s clear from the MPSC recommendations that we need to crack down on poor performance by the utility companies, rein in unnecessary costs they’re charging us, and expand competition and choice by increasing access to clean energy,” Poulson said in an emailed statement. “The Legislature should immediately return to Lansing and tackle this pressing issue head-on.”
ckthompson@detroitnews.com
This article originally appeared on The Detroit News: Michigan lawmakers could lower power prices, energy regulators argue
Reporting by Carol Thompson, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
By Carol Thompson, The Detroit News | USA TODAY Network
