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As Sun Sets on Solar Work Group, State to Suggest Next Steps Print

Clean Energy | June 4, 2014 | By Jim Dulzo

This is Part 8 of our ongoing coverage of the MPSC solar working group. See the entire series here.

All the slide shows and presentations are handed in; advocates and opponents have made and rested their cases; and the state’s Solar Working Group has had its last meeting on the future of sun power in Michigan.

Now it’s the Michigan Public Service Commission’s turn.

MPSC staff have until June 10 to sort through piles of data and then draft a report suggesting ways the state’s top two utilities, DTE Energy and Consumers Energy, could help more customers install rooftop solar systems—a trend triggered by their special “pilot” programs, launched in 2009 and expiring later this year.

Working group members have until June 20 to comment on the draft, and the commission staff will issue a final report by July 1.

The MPSC’s Julie Baldwin, who leads the SWG, said that the report would “highlight the data that we think supports some possible new program designs for customer-owned solar power, along with cost evaluations.

“I think the goal everyone has is to identify how to have a solar program,” she added, “and if there are subsidies necessary…make them really clear so people understand what it is. That will be part of the design.”

Baldwin said MPSC would like to eliminate the “boom and bust” cycle solar installers now endure, spur a steady expansion of that sector, and address utility worries that solar will push up customers’ rates.

But those modest goals are a tough sell to the state’s two largest utilities.

DTE representatives told the group several times they are only interested in “voluntary” solar programs going forward, while Consumers maintained a “we’re here to listen and learn” profile. And while neither company pushed back against solar advocates’ presentations during the workshops, the Edison Electric Institute, their trade association, weighed in at the final, May 20 session.

The utilities’ reluctance continues even as solar manufacturing and installation costs plummet; new Michigan and national polls confirm strong support for more renewables and less coal power, along with a willingness to pay more for it; and the Obama administration proposes new rules allowing states to use renewables, including solar, to cut their overall carbon emissions.

Wayne Appleyard, a working group participant who chairs the Ann Arbor Energy Commission, made that last point to MPSC within hours of Monday’s release of the U.S. EPA’s carbon-cutting plan.

“Given what came out of the EPA today and the large amount of old coal plants that DTE and CE have operating,” Appleyard wrote to the MPSC, “it seems that there should be some note in your report that emphasizes the role solar can play in replacing some of these plants. If the companies are to reduce their carbon output by 30 percent by 2030, solar may actually be one of the few paths, along with a massive move for conservation, to meet those goals. This calls for a larger and more aggressive solar program.”

Is Michigan Ready?

Proposed carbon regulations aside, solar advocates are pointing to the good paying, albeit small-scale employment the two utilities’ pilots produced; the remarkably strong customer interest in solar panels they sparked among residential and commercial customers; and Michigan industry’s prowess at high-tech manufacturing, which solar requires.

However, without new programs, many of the panel installation jobs the pilots fostered will dry up, and Michigan’s solar manufacturing industry will continue sputtering as other states, including Midwestern ones, continue pulling ahead.

Last week, for example, Illinois lawmakers authorized the use of $30 million collected from utility ratepayers for renewables to accelerate solar projects. Since DTE and Consumers are holding on to similar funds originally earmarked for renewables, advocates suggest the companies invest some of it in renewed rooftop solar programs.

Meanwhile other states and their utilities continue to take advantage of solar power’s steadily falling cost and 30 percent federal tax write-off via incentives, rebates and mandates, greatly accelerating solar development.

Michigan’s pro-sun crowd insists the state has all the necessary elements, except formal state policies, to do the same, including:

  • Confirmation, via the Snyder administration’s in-depth, public process in 2013, that the state can triple its current amount of renewable energy without harming the electric grid or significantly boosting rates, and has enough sunshine to make solar work well.

  • Polls, including recent ones of Michigan residents and DTE customers, finding nearly two-to-one support for switching from coal to more renewables, and paying more to do so.

  • Very strong customer interest in solar power, typified by the response to DTE’s Solar Currents and Consumers Experimental Advanced Renewables Program, which the utilities want to eliminate.

Last Call

The Edison Electric Institute used the final workshop to warn against setting new policies to expand rooftop solar in Michigan.

EEI’s Edward Comer rejected net metering, the most common way of paying customers for power from their rooftop systems, established in 43 states. It rolls back a customer’s electric meters when their panels make more power than they are using.

That, he said, means customers without panels end up paying more for fixed costs, like maintaining the grid, than solar customers do.

He added that the energy-use patterns of solar customers differ markedly from non-solar customers, making power management more difficult.

Comer also discounted Value of Solar, a new approach to rooftop solar rate setting the working group studied. VOS accounts for the economic advantages rooftop solar offers utilities—like less purchase of pricey “peak” power on hot days, less need for new plants and substations, less spending on fuel, and less pollution-control costs.

But Comer insisted VOS calculations are highly speculative; credit panels for grid savings that are unknown; discriminate against other non-polluting sources such as nuclear and wind power; and push up rates. He also claimed VOS violates federal laws.

His presentation included a joint statement from EEI and the Natural Resources Defense Council, a national nonprofit working for renewables and efficiency, that solar customers should pay their fair share for grid maintenance, receive fair payment for their solar power, and not shift costs unreasonably to non-solar customers.

However, when asked if he or his organization could suggest ways to pay customers for their solar power, other than net metering or Value of Solar, Comer said no. 

DTE’s Todd Lohrmann offered his own Value of Solar calculation for a company-owned solar farm, and derived a number much lower than those produced by Minnesota regulators or Austin’s public utility. But his calculation was for a centralized system, not dispersed panels, and excluded environmental and regulatory cost benefits.

Monica Martinez, a former MPSC commissioner who launched Hispanics in Energy, underlined the economic issues Hispanics face and cautioned that a poorly designed rooftop solar program could harm her constituents. She did not mention the health costs of living near coal plants, which affect many poor Americans, including Hispanics, or the solar employment Hispanics are gaining in solar-heavy states like California and Arizona.

And three University of Michigan graduate students presented research on the value distributed solar produces by reducing environmental harm, cutting fuel price volatility risks, and improving power quality. They found significant value for the first two and a tiny amount for the third.

Next Steps

Baldwin said that MPSC would post all comments it receives about the June 10 draft before publishing the final report.

“I’m thinking feedback will be more from the philosophical or policy point of view, not more data,” she said. “People may say the program size is way too big, or too small, or the cost is way too much or is not paying enough under these suggested programs. That’s the kind of input we are looking for.

“I really want it to be useful going forward…so people can look at the data and get a sense of where we are in Michigan with solar.”

The final report will have no legal clout, but Baldwin said she is hopeful for positive utility responses.

And if not?

“Well, at least we will have looked at solar,” she said, “and it’s possible a party could file a case, maybe in a power supply cost recovery challenge, to try to get a Value of Solar determination.

“And it is also possible that the Legislature might look at what we say when they are looking at new renewable energy legislation. At least they will have some good information to review.”

Baldwin also explained that the three MPSC commissioners likely would not comment on the report.

“They only speak about policy through orders they issue on MPSC cases,” she said.

She added: “I feel very optimistic, especially after having people from all parts of the renewable energy industry, the utilities, Sierra Club and other environmental groups, the solar installers, participate in the Solar Working Group. It was a wonderful thing to have everyone come together.

“Paul Proudfoot [head of the Electric Reliability Division] made it clear we wanted it to be a congenial process. He told us we should work together and try to find a path forward for solar.”

This is Part 8 of our ongoing coverage of the MPSC solar working group. See the entire series here. Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org