- Associated Press - Friday, March 13, 2015

WARREN, Mich. (AP) - Michigan should ramp up energy-efficiency programs over the next decade and encourage - but not require - utilities to produce more power with natural gas and renewable sources to replace retiring coal-fired plants, Gov. Rick Snyder told lawmakers on Friday.

He said his goal is that anywhere from 11 to 24 percent of the state’s electricity come from wind, the sun and other renewables by 2025 depending on their cost compared to natural gas. He would leave intact a current requirement that 10 percent of power derive from renewable sources and mostly led stand a provision opening up 10 percent of two dominant utilities’ electric markets to competitors who sell to businesses and schools.

The Republican’s speech, delivered at an electrician training center in the Detroit suburb of Warren, was intended to set the stage this year for a rewrite of Michigan’s 2008 energy law in the GOP-led Legislature.

That law - which includes a mandate to generate more renewable power - lets utilities comply by charging customers surcharges that have gone away or have been slashed. Snyder said he hopes those charges, along with fees that were imposed for energy-efficiency programs, will no longer needed.

He emphasized eliminating “waste” with more energy efficiency, saying it should become a “cornerstone” in the next law instead of “nice-to-have add-on.” He called for no longer limiting how much utilities can spend to help customers conserve energy and letting regulators weigh the benefits of spending on efficiency programs the same way they would other investments.



Snyder said a financing mechanism should be implemented so customers can replace old appliances and pay for it over time on their utility bills, which he said would not rise because of the energy savings.

“The most affordable energy you can get is the energy you never use,” he said.

Snyder said Michigan is too dependent on burning coal to generate power, and it must adapt because 10 coal-fired plants will be retired in coming years due to federal environmental regulations. Coal represents 59 percent of the mix now; he expects it to fall to 43 percent in 10 years.

Reaction to the message varied.

James Clift, policy director for the Michigan Environmental Council, said it overall was a “great speech” while adding he was a little worried that Snyder suggested the blend of natural gas and renewables may depend largely on their price.

“We never know where the price of natural gas is going. It is by definition volatile. … Renewables are inherently less risky for Michigan ratepayers,” he said.

Rep. Bill LaVoy, the top-ranking Democrat on the House Energy Policy Committee, said goals are fine but the legislation should possibly be written to require more renewable power if targets are not reached.

“Overall, I like the ideas in it. The devil’s in the details,” said LaVoy, of Monroe.

The response from conservative groups was mixed.

Larry Ward, executive director of the Michigan Conservative Energy Forum, applauded Snyder for “setting the tone of where this state could be.” The Michigan Freedom Fund, however, said he should have called to expand electric competition.

Snyder called the provision “polarizing.”

Michigan deregulated the electric market in 2000. Competitors to DTE and Consumers are allowed up to 10 percent of it under the 2008 law.

The system “does not work particularly well” and should be modified, said Snyder, who stopped short of proposing to end competition. He suggested a “fair choice” program in which alternative energy suppliers would guarantee capacity to provide reliable power for the long term so “they can’t leave the rest of us … subsidizing them.”

While Snyder did not propose upping the renewable energy standard in law, he said he opposes a House bill that would change the definition to count electricity generated by burning tires and industrial waste.

Jim Byrum, president of the Michigan Agri-Business Association, cautioned against not continuing energy-efficiency programs required under the 2008 law.

“After years of engagement, dialogue and litigation, Michigan’s utilities have recently stepped up to offer energy efficiency programs for agriculture. We firmly believe that without the mandate … we would not have seen these opportunities,” he said.

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