September 25, 2016
Critics: Proposed Charge Could Pull Plug on Clean Energy Growth
By Jay Greene
A proposed new grid charge leveled at small solar and wind projects in legislation on the Michigan Senate floor could derail growth in the state’s net metering program that incentivizes clean energy produced by homeowners and small businesses.
Despite some changes in Michigan Senate Bills 437 and 438 — primarily sections that govern net metering program rules — businesses in the state’s small solar and wind industry say the proposed bill package could reverse more than eight years of growth in net metering by discouraging investment in small projects.
Under SB 437, the Michigan Public Service Commission would be empowered to set a “fair and equitable grid charge to apply to customers who participated in a net metering or distributed generation program.”
The proposed bill, which is sponsored by Sen. Mike Nofs, R-Battle Creek, would likely require the MPSC to hold a contested hearing before an administrative judge who would hear testimony from all sides about a grid charge. The judge would then make a recommendation to the MPSC, which the commission could accept, reject or modify in an order, said MPSC spokeswoman Judy Palnau.
Last week, Nofs distributed draft four of SB 437 S-6 to the Republican caucus. Spokesman Greg Moore told Crain’s that while Nofs wanted to hold a vote on SBs 437 and 438, which is sponsored by Sen. John Proos, R-St. Joseph, a vote on the energy package likely will be held sometime in October.
Mark Hagerty, president of Michigan Solar Solutions in Commerce Township, said his business could be adversely affected if the grid charge was too high and discouraged customers from investing $10,000 to $20,000 in a rooftop solar project.
“If the grid access fee is comparable to what other states have done (about $5 per month), there would be a slight impact,” Hagerty said. “The bill doesn’t put a cap on the fee. If it is high, it could have a substantial impact on net metering and solar.”
While Hagerty said his business is up 40 percent over last year with about 55 projects, several customers have already backed away from rooftop solar installations because of talk of changing the law. He said the vast majority of system installations are solar projects approved for net metering.
“My biggest concern is if I hire somebody, and the state changes its policy, I have to lay them off and deal with unemployment and legacy costs,” said Hagerty, who employs seven and is opening another office in Riverdale. “I hope this bill dies on the vine,” he added.
Officials for Consumers Energy Co. and DTE Energy Co., the state’s two investor-owned utilities, have told Crain’s they favor the grid charge and that the current net metering law creates unfair subsidies that must be paid for by customers who don’t own solar systems.
The utilities, which call net metering a “subsidy,” believe solar and wind customers should pay their fair share to support transmission lines, substations, transformers, meters and other infrastructure costs.
Slow but Steady Growth
A small but growing number of people and small businesses in Michigan over the past decade have invested thousands of dollars in small solar panel arrays under 20 kilowatts to save money, improve electric grid reliability and cut down on greenhouse gases that contribute to man-made climate change, experts say.
Under Michigan’s 2008 landmark energy bill, Public Act 295, the state mandated a net metering program that gives credits to electric customers whose solar or wind power generating systems produce electric energy in excess of their needs. That electricity contributes to power grid reliability and, in effect, can provide local electricity to neighbors.
Last year, there was a 20 percent increase in net metering in Michigan, said the MPSC’s 2015 net metering and solar program report issued Sept. 12. The MPSC report said net metering increased to 2,155 customers in 2015 from 1,840 customers in 2014.
One reason for the growth is that solar panel costs have dropped 50 percent since 2010. Another reason is the net metering program gives customers credits based on retail rates.
But a grid charge fee, if set too high, could reverse those positive growth trends, said Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center.