- Associated Press - Monday, November 23, 2015

LANSING, Mich. (AP) - A centerpiece of Gov. Rick Snyder’s long-range energy plan derives from a simple premise - using less.

How Michigan can best require or incentivize utilities and their customers to cut electricity and natural gas “waste” through efficiency programs is a big issue for lawmakers looking to rewrite energy laws, potentially yet this year.

Some questions and answers about the issue:

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WHAT DOES MICHIGAN REQUIRE?

A 2008 law requires utilities to save a minimum amount of energy with efficiency, or “optimization,” programs - 1 percent of power sales and 0.75 percent of natural gas sales annually from the prior year through 2015 and beyond.

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ARE THE GOALS BEING HIT?

Yes. The Michigan Public Service Commission reports that utility providers last year met 141 percent of their electric savings targets and 130 percent of their natural gas savings targets. Efficiency programs saved the equivalent of 172,500 households’ annual power usage and 57,000 households’ yearly natural gas use.

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WHAT ARE THE ADVANTAGES?

For each dollar a utility spent on energy optimization in 2014, customers should expect to save $4.38. The cumulative reduction in demand for electricity defers or reduces the need to build new power plants, benefiting all customers regardless of whether they directly participate in their utility’s efficiency program, according to regulators. Benefits include less pollution, saved fuel costs and increased spending on new equipment and appliances and in the wider economy due to utility bill savings. The PSC says average residential customers save $4.04 a month on electricity and $5.90 on natural gas.

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HOW MUCH DOES EFFICIENCY COST?

Energy-efficiency surcharges are specified separately on monthly bills and for residents are based on energy usage. Regulators estimate average residents pay $1-2 a month each for power- and gas-efficiency programs.

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WHAT DO UTILITIES USE THE FEES FOR?

They spend the money offering customers rebates to buy more efficient washers, room air conditioners and dehumidifiers, to recycle old refrigerators and remove them from the grid, and to provide discounted compact fluorescent bulbs and programmable thermostats at stores. Customers who sign up for a home energy audit can qualify for higher rebates for weatherization improvements such as insulation and windows.

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WHAT COULD CHANGE?

Legislation approved this month by the Republican-led House Energy Policy Committee would set a non-binding goal of meeting 30 percent of Michigan’s electricity needs by 2025 through a combination of energy efficiency and renewable energy such as wind. It would keep efficiency requirements intact through 2018 but eventually transition to requiring regulators to assess the potential for increased efficiency as part of more robust long-range plans filed by utilities. James Clift, policy director for the Michigan Environmental Council, said it is his understanding that legislators intend to amend the bill to keep the 1 percent annual power savings in effect through 2021 while the new planning process is tested. The legislation contains a provision providing sweetened financial incentives for utilities that reduce power use by 1.5 percent a year. One factor the PSC must consider before approving a utility’s plan is whether it provides “reasonable progress” toward increased energy efficiency. “We see it as the most cost-effective thing out there. We assume that the integrated planning process would point toward an expansion of these programs moving forward,” Clift said.

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WHY MOVE AWAY FROM SPECIFIC REQUIREMENTS?

Majority Republicans oppose mandates and say they are not needed because the bills would emphasize efficiency programs in a more adaptable regulatory process. Snyder has said he anticipates that economic forces - saving energy being much cheaper than generating more of it - will drive increased waste reduction. But supporters of efficiency programs including environmental groups, some leading corporations such as Google, energy businesses and others have raised concerns. “We believe that clear statutory authority requiring utilities to offer energy efficiency programs is critical to ensure these programs remain available,” the Michigan Agri-Business Association wrote to the chairmen of the House and Senate energy committees in October. Sam Gomberg, an energy analyst with the Union of Concerned Scientists, said the state should strengthen, not diminish, its standards.

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WHAT ELSE IS OUT THERE?

Snyder and lawmakers are considering loosening or lifting caps on how much utilities can spend on efficiency programs. The governor also hopes to implement a financing mechanism so customers can replace big-ticket items such as furnaces and pay for them over time on their utility bills. Separately, the PSC wants Michigan’s two dominant regulated utilities, DTE Energy and Consumer Energy, to offer time-of-day rates and dynamic pricing so customers are encouraged to use less power in times of peak demand - doing laundry at night, for example - to reduce costs for all ratepayers. Commissioners have directed DTE to make the option available to all customers who have had a “smart” meter for at least a year. Consumers is expected to offer the rate structures by 2017. Efficiency advocates are seeking automatic enrollment of customers in the pricing structure so it is an opt-out system. They also contend the programs could be better marketed and made more attractive if the spread between peak and off-peak rates were wider.

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Online:

House Bill 4297: https://1.usa.gov/1S8PiAO

House Bill 4298: https://1.usa.gov/1N27Swg

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Follow David Eggert at https://twitter.com/DavidEggert00. His work can be found at https://bigstory.ap.org/author/david-eggert


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