ANSING, Mich. (AP) - Michigan would end 15 years of competition in the electricity market and its 10 percent renewable power requirement would be left intact - but not rise - under a rewrite of the state's energy law proposed Thursday by a key Republican.
House Energy Policy Chairman Aric Nesbitt of Lawton said guaranteeing Michigan's two dominant utilities 100 percent of sales in their regions would save customers money and ensure the power supply is reliable.
Michigan deregulated the market in 2000. Competitors who sell power to businesses and schools are allowed up to 10 percent of the market under a 2008 law, which also required more electricity to come from renewable sources and added a small monthly fee to bills so utilities can help customers use less energy.
Nesbitt's plan was immediately assailed by manufacturers and school districts that buy from competitors to DTE Energy (NYSE: DTE) and Consumers Energy and environmental groups that want to see lawmakers increase the green power requirement, which is 10 percent by year's end.
But he defended the legislation, telling reporters it would ensure Michigan has a "reliable energy supply creating new generation for the best value for the ratepayers in our state and for job creators." The current law should be scrapped in favor of an "all-of-the-above, holistic" approach with fewer mandates.
Many coal-fired plants are being phased out in part because of federal pollution rules. Republican Gov. Rick Snyder announced an energy strategy in 2013 that included less reliance on coal and greater use of natural gas and renewables, but he decided to wait to seek legislative changes in the energy law.
Rewriting the 7-year-old law is expected to be a major task for the GOP-led Legislature in 2015, with a deal unlikely before the fall. Snyder is expected to detail his plan later this month.
House Democrats this week called for doubling the renewable requirement to 20 percent by 2022, while prohibiting extra fees on bills to pay for it and providing "off-ramps" if non-renewable sources are cheaper.
"We believe that investing in renewable energy creates jobs and is good for our state's economy. But we also believe that we have to do so in a realistic way," said House Democratic Leader Tim Greimel of Auburn Hills.
Going from 10 percent to 20 percent in seven years is "very realistic and achievable," he said.
Nesbitt's bills would also eliminate energy-efficiency fees for electric and gas customers, though liberals and a conservative energy group said that the fees are working and saving energy. Nesbitt also proposed ending major utilities' ability to automatically increase rates while the Public Service Commission reviews requests, giving residential customers more advocates in the process and changing the definition of renewable energy to count electricity generated by burning some hazardous wastes.
A lawyer for the Association of Businesses Advocating Tariff Equity, a group of large industrial electric customers that favors competition, criticized the legislation.
"It certainly raises the question when you have 90 percent (of customers) that are paying high, uncompetitive rates and you've got 10 percent who are paying competitive rates, it seems like you ought to be going the direction of competitive rates - not the other way around," said Rick Coy.
Though some other Republicans favor competition and hope to raise or eliminate the cap, top Democrats said they support Nesbitt's position with a caveat.
"If companies ... can demonstrate that without it they would have to lay people off, then they could continue accessing that choice market," Greimel told The Associated Press. "Because of the fixed infrastructure costs that utilities have, when (business customers) opt out of the regulated system and get electricity from out of state, residential ratepayers end up picking up the tab. We think that's wrong."
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