Testimony on Senate Bill (SB) 437, 438, and other energy policy issues affecting electric co-ops was recently presented to the Senate Energy & Technology Committee in Lansing.
“MECA supports many of the energy policy changes proposed in SB 437 and 438, however, there are areas that can be addressed to make this legislation even stronger,” Craig Borr, CEO of the Michigan Electric Cooperative Association (MECA), told the Committee on Sept. 24.
Specifically, Borr testified on proposed new Integrated Resource Planning (IRP) practices for electric utilities; changes to the Customer Choice & Electric Reliability Act; and SB 282, transmission legislation introduced earlier this year.
Regarding the new IRP process in SB 437, Borr said, “MECA is opposed to an IRP process for electric co-ops, but we understand why it is necessary for the state’s two largest investor-owned utilities that have a profit motive and will be adding billions of dollars in new generation investment over the next several years.”
He also said MECA does not believe a new “central generation planning process” for publicly-owned utilities, such as electric co-ops, is necessary because the co-ops are nonprofit and exist with the simple mission of serving consumers with reliable, affordable power supply. “This new regulatory process will be expensive and time consuming, and we do not believe the state’s involvement in the decisions of our democratically elected local governing boards is necessary. Michigan’s municipal electric utilities share our views on this matter.”
Addressing Choice concerns with SB 437, Borr continued, “MECA has a member-co-op, Wolverine Power Marketing Cooperative, which has successfully operated in Michigan’s electric choice market on a nonprofit basis for over a decade.” Wolverine Power Marketing Cooperative (WPMC) serves some of the state’s leading companies, such as Dow Chemical, Amway, General Mills and Herman Miller, and has saved its member-consumers nearly $100 million in energy costs.
MECA’s position on Choice is already consistent in many ways with the proposed changes, Borr added. “We support the 10 percent Choice cap for all Michigan utilities and proposed statutory changes that will require Alternative Electric Suppliers (AES) to demonstrate long-term electric generating capacity. Customers should also not be able to transition to/from Choice based upon market conditions, thereby using local utilities as a safety net.”
In a separate hearing (Oct. 4), Kim Molitor, president/CEO of Wolverine Power Marketing, shared with the same Committee more specific changes that would meet these Choice parameters and level the playing field so utilities and AES providers operate under the same rules.
A large concern is whether sufficient future capacity exists for Michigan in the Midcontinent Independent System Operator (MISO) footprint. “The language, as drafted, is punitive and not feasible for any Choice supplier,” Molitor explained. “The capacity prepayment requirement is focused solely on AES companies and is not standard utility practice.”
“Currently, all utilities in the MISO footprint prove capacity by participating in MISO’s capacity auction or submitting a fixed resource plan to show it can meet its load plus reserve margin requirements for the upcoming year,” Molitor continued. “WPMC is recommending that all AES companies be required to follow this standard utility practice.”
Another concern is AES contracts. “These contracts contain commercially sensitive information that would competitively disadvantage both the AES and its customers, which are non-regulated, private companies,” Molitor said. “Since many WPMC members, and other Choice participants, are competing in the global marketplace, access to such information by a competitor could be devastating to Michigan businesses.”
Instead, WPMC is recommending that retail contracts not be filed with the Michigan Public Service Commission (MPSC) and AES companies be required to prove they have procured sufficient supply by filing prospective capacity reports with the MPSC, similar to those filed by all other Michigan utilities.
In the final part of his testimony, Borr said the Legislature’s energy policy discussion must include SB 282—the Michigan Electric Infrastructure Act. This bill would foster an independent examination of the costs and benefits of building a new, high voltage transmission line between the Lower and Upper peninsulas. “The U.P. has suffered from ‘energy policy neglect’ for too long and this issue should be heard before this Committee, as it has been in the House Committee on Energy Policy.”