Integrated resources plans could offer Michigan activists a venue to make sure utilities follow through on recent renewable pledges.
Michigan activists who struck a deal with utilities this month to boost renewable energy generation will have a new forum for holding the companies accountable.
Organizers of the Clean Energy Healthy Michigan campaign dropped a ballot initiative to boost the state’s renewable portfolio standard to 30 percent by 2030 after DTE Energy and Consumers Energy agreed to voluntarily reach 25 percent by that year.
Thanks to a 2016 state law, both companies will soon have to show regulators — and the public — detailed plans for meeting future generation demands, including renewables, through a process known as integrated resource planning.
Michigan hasn’t had such a process in years, but the legislature two years ago instructed regulators to develop a more robust set of requirements. Utilities must file these plans at least every five years.
The process, which models a variety of generation scenarios over a 20-year period, won’t force utilities to follow through on their pledges, but it will add transparency to long-range planning.
“If they try and wiggle their way out of this, I think their credibility takes a serious hit,” said John Freeman, who led the campaign to boost renewable generation.
In addition to reaching 25 percent renewable generation by 2030, DTE and Consumers agreed to voluntarily reach a 25 percent energy efficiency goal in that time.
Neither utility gave details on how they’d meet their goals, saying it would be part of long-term integrated resource plans filed with the Michigan Public Service Commission over the next year. Consumers’ is expected next month, while DTE’s will be released in March.
Under the law, utilities are required to submit their first integrated resource plans to the Michigan Public Service Commission no later than April 2019, after which they will be open to public input — a more controlled and potentially more constructive venue than a statewide ballot campaign, where both sides faced political risks.
‘Something to risk’
The Clean Energy Healthy Michigan committee had raised roughly $2 million through NextGen Climate Action, a San Francisco-based political action committee led by climate activist and investor Tom Steyer.
Meanwhile, the utilities were likely ready to spend tens of millions of dollars on an opposition campaign as they did in 2012.
Campaign officials said they were prepared to submit the 252,523 required signatures by the end of May, but Freeman said both sides gained by avoiding a politically charged campaign.
“It’s a fair point to say, ‘If we went ahead with a ballot initiative and voters supported it, would it be more of a guarantee by having it enshrined in law?’ Of course,” Freeman said.
In 2012, Michigan voters rejected a constitutional amendment to increase the renewable standard to 25 percent by 2025. Pundits have said it didn’t pass for a variety of reasons, such as amending the state constitution and heavy opposition spending by utilities.
While some developers feared the ballot proposal would have created another political wedge among voters, public opinion increasingly favors renewables. Also, renewable prices have continued to drop, challenging the opposition’s argument that a higher RPS would harm ratepayers. The proposal may also have been bolstered at the polls as the question would have appeared on the same ballot as a plan to legalize recreational marijuana, which is expected to turn out a higher number of progressive voters.
“The problem is, there was no guarantee that we would win,” Freeman said. “Just like there was no guarantee from the utilities’ point of view that this would automatically lose. Both sides had something to risk.”
Freeman said the utilities may have spent $25 million to $30 million on a five-month campaign and still lost.
Instead, the agreement makes Michigan’s Integrated Resource Plan process, adopted in 2016 legislation, all the more important.
“Without the force of statute behind this commitment, the public and Michigan’s elected officials must be vigilant to hold DTE and Consumers accountable to the new commitments they’ve made to their customers,” said Matt Kasper, research director with the Energy and Policy Institute, a utility watchdog group.
While clean energy groups lost a fight earlier this month when regulators approved a 1,100 megawatt natural gas plant for DTE, Freeman is optimistic that the stakeholder process will still keep the utilities accountable.
“That level of integrity is very important for a corporation the size of DTE and Consumers,” Freeman said. “They didn’t just make a commitment to Tom Steyer and John Freeman, they made a commitment to every voter in Michigan. We think it will be extremely politically difficult to double-cross the public on this.”
Some argue the utilities’ compromise does little to advance clean energy. DTE and Consumers already planned to spend enough on energy efficiency to hit the target by 2030, experts said. Under the state’s energy efficiency standards, the companies are allowed to recover millions of dollars a year to exceed efficiency requirements.
“This is a target that one would assume they’re already on track to make,” said Martin Kushler, senior fellow for the American Council for an Energy-Efficient Economy. “The upside is that it’s positive messaging about the potential for clean energy and that utilities should be — and say they will be — doing a lot in the area of clean energy.”
Kushler called the 50 percent clean energy goal “a little misleading” because efficiency investments already made will have expired by 2030 but still count toward the 25 percent goal. A Michigan Public Service Commission report earlier this year says efficiency “programs and measures” have an average life of 12.86 years.
The total percentage of energy efficiency savings is the sum of each year’s spending. At 1.5 percent annual efficiency spending based on total electric sales — the amount DTE and Consumers had already planned to spend — the utilities would each hit 15 percent targets between 2020-2030. That’s in addition to efficiency savings already made since 2010, after the 2009 baseline year from which the 25 percent target starts, Kushler said.
Kushler and others also note the 50 percent target is not required by law the way a Renewable Portfolio Standard would be.
On the renewables side, Michigan utilities are required to hit 15 percent by 2021. DTE spokeswoman Carly Getz said the utility plans to double its renewable energy capacity by 2030, while Consumers has announced plans to hit 40 percent by 2040.
“Whether we get there through an RPS or through voluntary commitments, the end result is the low-carbon energy system we’re working toward,” said James Gignac, lead Midwest energy analyst with the Union of Concerned Scientists. “It is great to see the announcement, however there is more work ahead of us to ensure utilities implement those commitments through smart investments.”