This is Part 7 of our ongoing coverage of the MPSC’s solar work group process. Read the other articles here.
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It’s getting to be crunch time for Michigan’s Solar Work Group.
The SWG holds its last information-gathering meeting May 20 before the state issues a draft report in June that could recommend new ways to develop more customer-owned, rooftop solar power in Michigan.
The 10 a.m. meeting might be contentious: It features a presentation by the Edison Electric Institute, a national utility trade group that sees rooftop solar as an existential threat to their clients’ monopolies, and helps lead a multi-state attack on the technology.
So far, the gatherings have been low-key affairs.
Every three weeks since early February about 40 people have traveled to a faceless, low-roofed building on Lansing’s west side; grabbed a chair in an austere, brightly lit meeting room; listened to speakers wielding Power Point presentations and jargon like “dynamic pricing,” “capped net metering,” and “third-party tax appetites”; asked technical questions; and adjourned.
The Michigan Public Service Commission assembled this gaggle of utility representatives, businesspeople, and policy wonks after solar advocates convinced an administrative law judge that DTE Energy and Consumers Energy, the state’s two largest utilities, were not facilitating enough solar power development, particularly on customers’ rooftops.
The judge’s decision last year came as rooftop solar installations soared in states blessed with solar policies far stronger than Michigan’s. Those policies, paired with sharply falling panel prices, are sparking a nationwide rooftop solar stampede that EEI and many utilities are resisting and Michigan is missing—along with the well-paid employment, cleaner air, and hedges against volatile fossil fuel prices solar provides.
The work group has repeatedly heard strong arguments from advocates that rooftop solar makes good economic sense for utilities, ratepayers, solar and conventional businesses, and the environment.
But the two utilities have barely responded. Their staff asked occasional questions, contributed company data to several analyses, and, in their sole presentation, summarized what most already knew about the DTE’s Solar Currents and Consumers’ Experimental Advanced Renewables Program pilots. The pilots, which are more generous than state-mandated net metering rules require, pay a small group of lottery-selected customers premium rates for their panels’ output.
Neither company indicates interest in continuing—much less expanding—their tiny solar pilots, which, together, over four years, developed about two percent of the output of a single, large, coal-fired power plant.
When pressed during an early workshop, DTE staff told the SWG they are only interested in voluntary programs; Consumers said its people attend the workshops to learn, not decide next steps.
Monopolies Push Back
At the May 20 meeting, Ed Comer, of the Edison Electric Institute; Todd Lohrmann, of DTE Energy; and Monica Martinez, of Hispanics in Energy, will offer responses to the previous meetings' presentations and discussions. They will follow a presentation by University of Michigan graduate researchers about the economic value of using solar energy to hedge against fuel prices, protect the environment, and improve power supply quality.
EEI’s January 2013 white paper, Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business, was a clarion call to utilities as rooftop solar installations surged in many states. Thousands of residents and businesses began using their states’ net metering laws, which require utilities to roll back power meters when customers’ panels produce more electricity than they’re using.
Disruptive Challenges argues that as more people use net metering to zero out their electric bills, utilities receive little for providing backup power. The paper warns that falling revenues will force utilities to increase rates.
The problem will worsen, the paper predicts, as more people react to the supposed rate hikes by putting up panels, too. The paper sees the cycle repeating until the companies go out of business.
EEI, the highly conservative American Legislative Exchange Council, some utilities, and many elected state officials are sharply attacking net metering across the country, pushing for severe limits on net metering or hefty surcharges to pay what they insist is a fair amount for using the utility grid.
The clash produces unusual bedfellows, most famously in Georgia. There, Tea Party Republicans and the Sierra Club joined forces to stop the imposition of a very high monthly fee on all panel owners. The Tea Party views the fee as a tax designed to protect a monopoly.
All other similar attacks on rooftop solar have failed, except in Ohio, where last week the state legislature approved a freeze on all clean energy development, ostensibly so state regulators can determine whether the state’s renewable energy mandate is pushing up electric bills.
More Meetings, More Suggestions
The two previous workshops looked at an additional way to set fair rooftop solar power rates and a proposal for continuing and slightly expanding DTE and Consumers solar pilots while lawmakers consider next steps for renewable energy and energy efficiency mandates.
The group also heard from a national rooftop solar company that said small changes in the utilities’ solar incentives and regulations would allow the firm and its competitors to lease “third party” rooftop systems to building owners.
On April 8, Douglas Jester, of the renewable energy consulting firm 5 Lakes Energy, presented a technical discussion on dynamic pricing. The technique sets utility electricity prices on an hourly basis, based on both daily and near-instantaneous electric supply and demand data.
Jester said using dynamic pricing to set all rates, including those from solar panels, would better serve customers and utilities by clearly marking when electricity is most and least expensive to generate and consume.
At the most recent April 29 workshop, Brad Klein, of Chicago-based Environmental Law and Policy Center, tied the push for more solar to the state’s renewable energy law. ELPC’s legal work led to the Solar Work Group.
Klein pointed to determinations by MPSC that DTE’s and Consumers’ recently filed plans for renewables development fail “to comport with the objective of PA 295 to increase the diversity of energy generation sources” and that solar programs should be “long term, consistent and…foster steady growth.” He also pointed to solar power’s nearly inconsequential role in both utilities’ generation portfolio, and the boom and bust cycles the firms’ solar pilot lotteries trigger.
He suggested eliminating the lotteries, expanding the current solar pilots, establishing a steadily declining but attractive solar rate reflecting the technology’s falling costs, taking advantage of the 30 percent federal solar investment tax credit before it falls sharply in 2016, and using some of the renewable energy surcharges the utilities collected but did not have to use to meet their mandates.
Klein suggested each utility spend $15 million from their lode of unused cash, scheduled to be returned to customers in 2029, for incentives that could trigger an additional 30 MW of solar panels for each company—roughly six times what their pilots have produced so far. He added that this would help drive down the cost of solar in Michigan, create steady employment in the state’s struggling solar installation sector, and help the utilities comply more fully with PA 295.
The approach requires no down payment, installation work, or maintenance by customers, who lock in a guaranteed rate that stays the same even as utilities raise their rates. News reports confirm that Sunrun, Sun City Solar Energy LLC, and other similar companies are the main driver of the current explosion in rooftop solar installations in the U.S.
Last year the U.S. solar industry set another record, with a 41-percent increase in installed solar capacity over 2012. The sector accounted for 29 percent of all new generating capacity added that year, making it the second-largest source of new generating capacity that year, behind natural gas.
Roughly half that development was by utilities that are now investing heavily in centralized solar power plants.
Bertram told the work group that once her company sees that Michigan has a stable solar policy and no restrictions on third-party ownership, it would set up shop in the state. The company’s website says it hires local installers, not out-of-state workers, for its projects.
Jim Dulzo is the Michigan Land Use Institute’s senior energy policy adviser. Reach him at email@example.com.