Odd Michigan lawmaker coalition fights solar rate cut
Michigan’s two biggest power companies are locked in a battle with an unusual coalition of liberal Democrats and conservative Republicans over how much to pay for electricity from customers who install solar panels to lower their utility bills.
STORY HIGHLIGHTS
- Power firms want to cut in half the rate they pay for electricity from customers with solar panels
- The rate cut is opposed by an unusual partnership of liberal Democrats and conservative Republicans
- The “green tea” coalition pushes policies for alternate energy sources and more choice for consumers
- Utility companies argue their hourly electrical rates include a small subsidy to solar panel users
DTE Energy and Consumers Energy want to cut in half the rate they must pay to such consumers, arguing that the current “net metering” rate amounts to a subsidy that is unfair to other electricity consumers.
But the “green tea” coalition of environmental Democrats and tea party-oriented Republicans say they oppose the utilities’ proposal because they want to promote more power choices for customers and the expansion of alternative energy sources.
“We ought to be incentivizing diversity and competition in our energy market ... but the posture of the big utilities is to oppose all competition and diversity,” said tea party-oriented Republican Rep. Gary Glenn of Midland, who is aligned with renewable power advocate Jeff Irwin, D-Ann Arbor.
The utility companies argue their proposal is fairer to all of their other customers, whose hourly electrical rates arguably include a small subsidy to solar panel users that will grow as more homeowners turn to self-generated energy.
“These customers (solar panel owners) still are using the grid,” said DTE Energy renewable energy director Dave Harwood. “It’s several million dollars per year that gets spread over all of our other utility customers.”
The battle is a smaller but still intense fight in the larger debate about how lawmakers should rewrite the state’s energy laws. In March, Gov. Rick Snyder called for a switch from coal to natural gas as the main source of base electrical generation, and set an ambitious goal of trying to satisfy up to 40 percent of the state’s power needs within a decade from wind turbines, other renewable sources and strong energy-saving measures.
Self-generated solar energy is a related issue involving a small but growing portion of the two power giants’ 4 million Lower Peninsula customers.
About 1,840 utility customers have spent as much as $20,000 to $30,000 apiece for solar panels to electrify their lights and appliances as well as feed power into the electrical grid for an offsetting credit on their monthly bills. They’re entitled to be credited at a “retail” rate of 15.4 cents per kilowatt hour through a billing mechanism called net metering, Harwood said.
There could be significant growth of this little-used option as more consumers become aware of it and are attracted to solar energy’s declining costs, utility officials acknowledge. So DTE and Consumers want to reduce its future impact on their bottom lines while rolling out their own solar setups to meet the demand for more green energy. Both companies are publicly traded.
There is Senate legislation, including one bill sponsored by Republican Sen. John Proos of St. Joseph, that calls for the rate reduction. A package of energy bills sent to the House floor contain complex amendments whose impact on net metering is unclear.
The utilities’ proposal would hurt Mark Hagerty, who owns a Pontiac solar panel business that he expects to clear $1 million in sales this year. Hagerty said it would would harm sales to customers such as David Reed of West Bloomfield, who installed solar panels on his home to save money.
“Power companies for the first time are encountering competition and are trying to quash it,” Hagerty said. “It’s very unfair. We’re putting power into the grid that’s worth three times what we’re taking off the grid.”
That’s because solar panel users send power to the grid during peak-use daylight hours, when utilities are allowed to charge their highest rates, and draw electricity off the system at night when power is worth one-third as much, he said.
‘I don’t pay a bill’
Nancy Popa, Consumers energy supply operations-renewable energy director, said self-power customers are getting a special deal that doesn’t require them to pay their full share of costs to maintain utilities’ “poles and lines.”
“They use it 24 hours per day ... to import or export (power),” she said. “If they’re generating energy, we believe they should be compensated at the rate of energy — not energy plus the distribution costs.”
“They also tend to be our more-affluent customers,” said DTE’s Harwood, adding that not everyone can afford $20,000 to $30,000 for solar panels and the extra costs would be shared by less-affluent customers.
“All I know is that I don’t pay a (power) bill,” said West Bloomfield’s Reed, whose ground-level solar panels went online in October 2010. He builds up credits on sunny summer days and cashes them in when his panels are idle on overcast winter days.
The Bloomfield Hills High School music teacher, who plans to retire at the end of the year, said he feels secure having his home paid off and a home-based energy system that pays for itself.
Reed hasn’t followed the issue closely but said the utilities’ proposal “sounds like a power grab.”
Western Michigan solar panel user Daniel Zimmer charged that the utilities are using “propaganda” to try to strongly discourage other customers from generating their own power.
Zimmer and his wife live in a 1,200-square-foot home on 11 acres near West Olive. He said he installed a 5-kilowatt solar array in 2011 and boosted it to 10 kilowatts with more panels in 2013 as an alternative to investing that money in a 401(k) plan for his retirement.
“There are assurances the sun is going to shine,” said Zimmer, who doesn’t consider himself affluent. “You never know what’s going to happen on Wall Street.”
He said his solar panels generate enough excess power that he has built up a $1,300 credit with Consumers Energy. Nevertheless, he said, he pays a $20 monthly utility charge.
‘Green tea’ ideas
Glenn and Irwin reject the utilities’ arguments as theoretical, unfair and shortsighted.
“We approach this issue from very different sociological angles ... (but) both believe people should be able to generate power and be paid a fair price when they generate it,” Irwin said.
Among pending House energy bills with unknown prospects are at least two involving green-tea coalitions:
■Glenn and six other Republicans are allied with Rep. Rose Mary Robinson, D-Detroit, and two other Democrats on a bill, opposed by the utilities, that would entitle groups of customers to partner in solar arrays or wind turbines and be reimbursed for excess power they’d generate and feed into the system.
■Irwin, Robinson and four other Democrats are joined by Republican Reps. Ed McBroom of Vulcan and Larry Inman of Williamsburg as sponsors of a bill that would reinforce the right of alternative energy customers to be credited at retail rates for power they supply the grid.
Irwin argues solar energy customers pay retail power rates for what they use when their panels are out of commission at night, so they at least should be credited at or near average retail rates when they pump high-value energy into the system during the peak demand hours between noon and 6 p.m.
Glenn says communities, neighborhoods, Farm Bureau chapters or churches should be able to collectively own a solar array or a wind farm serving their energy needs. For excess power they send into the system, he said, they should be reimbursed at retail rates, minus a power grid maintenance fee negotiated with the utilities.
“You don’t put all your eggs in one basket,” Glenn said. “The more diverse and more competitive the market is, the more secure it is.”
Meanwhile, DTE and Consumers are arguing they can provide solar energy cheaper than customers could on their own.
DTE has the state’s largest solar panel spread at Domino’s Farms near the M-14 and US-23 intersection outside Ann Arbor, plus 22 smaller solar arrays and four more on the way.
DTE is doing so in part so it can offer customers opportunities to buy into the utility’s solar panels rather than installing their own. Economies of scale make DTE’s solar power a better deal, Harwood claims.
Consumers Energy is preparing to build “solar gardens” at Grand Valley State and Western Michigan universities with the same goal.