Michigan Energy Policy: Looking backward and looking forward.

2015 will be a watershed year for energy policy in Michigan – and few states will be watched as carefully by energy policy experts and interested observers.  The expiration of Michigan’s “10 x 2015” renewable energy mandate is framed by accelerating changes in energy markets, new federal regulatory requirements, the proliferation of disruptive new technologies and energy services, and antiquated regulatory paradigms.  Michigan is poised to do something “big” on energy, with diverse stakeholder interests having dramatically different ideas, goals and expectations for Michigan’s energy policy.

First the positives:

No one can accuse the Snyder Administration of not being careful and deliberate in setting the stage. The administration brought in an immensely capable energy advisor, Valerie Brader, and appointed a new highly-regarded Public Service Commissioner, Sally Talberg.  The Governor set the framework for future energy policy calling for an energy plan that would be adaptable, reliable, affordable and protective of the environment.  It launched a series of well-planned informational energy “listening sessions” co-chaired by the MPSC Chair, John Quackenbush and respected State Energy Office Director, Steve Bakkal, who solicited and responded to copious public comment.  MPSC staff contributed research, analyses and expertise, culminating in the issuance of four very thorough and well documented reports.

Meanwhile, Senator Mike Nofs, is chairing a large and diverse stakeholder effort with the end goal of crafting a flexible, consensus-based energy policy platform.  Nofs may be the most knowledgeable legislator on energy issues, having navigated Michigan’s 2008 energy package to a safe landing.

The policy formation process has also been aided or derailed – depending on one’s perspective – by EPA’s Clean Power Plan – requiring overall reductions in carbon dioxide emissions from existing fossil fuel plants.  Significantly, the administration has responded cautiously to EPA’s regulatory thrust, reserving judgment publicly but articulating its most pointed concerns in its comments submitted to EPA.

But there are negatives as well.

There is still a palpable and systemic aversion to embracing innovation in energy policy.  Despite numerous signals that an energy transformation is underway and disruptive change to the power system has arrived, innovation and ingenuity in the energy sector are being actively resisted and even repressed.  Myths regarding the cost, effectiveness, and adequacy of renewable energy and energy efficiency persist, despite having been thoroughly debunked by virtually every authoritative source including the MPSC.  Cost and benefit analysis that should be embraced is eschewed.  Integrated resource planning – the collaborative process used in 38 states by which energy options are identified, measured and assessed – is almost entirely nonexistent in Michigan. Long-term considerations of energy risk factors like emerging energy technologies, changing economics, future regulatory constraints and climate considerations are being largely ignored.

Backwards or forward?

“If the rate of change on the outside is greater than the

rate of change on the inside, the end is near.”

Jack Welch, former CEO, General Electric

In leading states, energy policy is evolving much faster in recognition that energy policy innovation must keep pace with technology and market innovations.  These states are accelerating efforts to anticipate the coming changes and to benefit from the transformative opportunities the new energy system will provide.  In leading states, collaboratives among utilities, public utility commissions, national laboratories, energy technology companies and service providers abound, focusing on smart-grid development, integrating distributed energy resources, developing microgrids and meeting future load through demand management.  In leading states, peak load and reserve capacity planning are focused on grid balancing through automated controls, energy storage, integrating electric vehicles, demand response and microgrids. In Michigan, reserve capacity needs are being met by refurbishing or building natural gas plants that may operate less than 400 hours per year – the same approach that was used in 1950.

Make no mistake – Michigan is at an energy crossroad.  We can join efforts and learn from leading states, or we can pass on innovation, ingenuity and modernity and watch other states reap the benefits. And it is not just about building a modern power system, it is about talent and business attraction, meeting the clean power demands of the Googles, Apples and Amazons, and engineering the most adaptable, reliable, affordable and environmentally benign energy future possible.

-Posted by Skip Pruss, Principal, 5 Lakes Energy