With the flip of a switch, Michigan energy users will be contributing to new laws aimed at reforming energy policy to create renewable, reliable and cost-effective fuel.
This is the goal of the Michigan Comprehensive Energy Plan, sponsored by Vice Chair of the Senate Energy and Technology Committee Sen. John Proos, R-St. Joseph and Chair of the Senate Energy and Technology Committee Sen. Mike Nofs, R-Battle Creek. The plan consists of Public Act 341 and Public Act 342, formerly known as Senate Bill 437 and Senate Bill 438.
Driven by a goal to have at least 35 percent of provided Michigan power be renewable or energy-waste reducing, the laws which go into effect in April will seek to use more renewable energy and more strategic planning to create energy production.
The public acts were signed into law by Gov. Rick Snyder in December. The acts seek to accomplish three basic goals for users: affordability, reliability and flexibility. The Michigan Comprehensive Energy plan will impact current and future energy policy and the laws are expected to be in place until 2021.
With the cost of fuel dictated by a fickle market and subject to change, putting these plans in place also gives the state more power to call the shots on energy policy, keeping energy jobs and energy power in the state of Michigan, Proos said.
Specifically, Public Act 341 will seek to create a more reviewed and transparent process for potentially new energy production. Through the integrated resource planning tool — a method of energy review — the Michigan Public Service Commission will decide the most cost effective and prudent route for energy development.
“We have always had the committee, but they did not have the legislative authority to put together an integrated resource planning review,” Proos said in a phone interview Friday. “It keeps the rate payers protected in the process because utilities have to get approval to build new production.”
Proos described the acts working in tandem. While Public Act 341 seeks to help evaluate when and where more energy needs to be created, Public Act 342 seeks to create a method for identifying the most cost effective and renewable source of energy for the job.
As the nation begins a transition to using more clean and efficient energy and the price of wholesale energy increases, residents may have felt fluctuating cost.
This is the case for Niles and Dowagiac residents, many of which use city supplied power, where these new laws do not directly apply.
“Niles is unique,” Proos said. “They have their own municipal electric system and they do not come under the same rules that those that are in the incumbent utilities in Michigan have.”
Niles gets their municipal power from American Electric Power. AEP will be responsible for following the new laws, including seeking to create more products that are renewable or waste reducing energy.
Last week, Niles City Council approved an average electric rate increase of 5.2 percent.
The hike will be divided across 11 rate classes and the city will be using consultation to decide how the hike will be divided among users. The classes consist of three main categories including industrial, residential and commercial and these classes are divided into various subclasses.
“It is a little larger than normal,” said City Administrator Ric Huff of the increase. “It is typically around 3 percent.”
The increase covers a 4.5 percent rise in the price to purchase power — a shift in price that has built in recent years as the nation switches energy production to cleaner sources, as well as deals with regulation changes and need for infrastructure and operational costs.
Huff said the city hopes to have a report from consultants by mid-January. He added that residents should keep in mind that no individual will be burdened by a 5.2 percent increase.
The hike also will include allowance for capital improvements, Huff said.
Dowagiac residents who use the city’s core utilities also faced rate hikes in April when the Dowagiac City Council motioned to approve an increase in the usage of electric, water and sewer.
The increase included a ready-to-serve charge hike of 8 percent and a commodity charge increase of 10 percent on electric rates. The 10 percent increase was planned to be split, with half of the increase starting on and after June 10 and Oct. 10. Additionally, homes using 4,000 gallons of water would see an increase of $4.94 on and after June 10.
Even for municipalities who buy their own power, other than creating more renewable energy goals from the source, the benefit could also be keeping more power in Michigan.
“Really this is about cost competition,” Proos said. “And the ability to compete and expand jobs in the state of Michigan, with a reliable and affordable policy that puts Michigan in a place to succeed in the years ahead.”
Additionally, Proos said the law seeks to eventually incorporate technology, allowing users to run appliances when the cost is least expensive.
While the platform for such technology has yet to be established, Proos said that with the help of possibly an iPhone or iPad, consumers could use the device to see when there is not as much of a spike in energy demand and therefore use energy when it is less costly.
“[It is] critical for residents of southwest Michigan to be able to keep their lights on,” Proos said.