Energy Freedom Legislation Introduced in House

. July 31, 2018.
energy

Rare Bipartisan effort to free Michiganders to generate their own energy

Yousef Rabhi (D-Ann Arbor) is one of five co-sponsors of a bipartisan bill package that he says is designed to make it easier for individuals to generate energy at their homes. The five bills, together titled the Energy Freedom legislation, were introduced into the Michigan House of Representatives in early May.

The legislation would have a wide range of effects: the elimination of the current .5% cap on the number of households that can contribute their own power to the electric system; a community solar garden option, where groups can invest in a solar grid that decreases the monthly bill of each member; and the creation of solar microgrids for neighborhoods and systems like hospitals, that could continue to generate their own energy in the event of a widespread power outage.

The bill would also change the framework used to calculate how much individual solar owners are compensated for energy they contribute back to the grid, from net metering to fair value pricing. The bill package is facing opposition from DTE Energy, one of Michigan’s primary utility companies.

Externalizing costs

Camilo Serna, Vice President of Corporate Strategy at DTE, says that DTE opposes the bill because the current framework already overcompensates people who install individual solar panels by paying them the retail rate of the energy they produce. According to Serna, this rate does not include grid maintenance, and is in effect a subsidy for solar owners. DTE wants to move from net metering to an inflow-outflow billing model, where customers who contribute electricity to the grid are paid less than the retail rate for the energy they produce, but buy energy at the retail rate. Serna says that the difference in those prices will be used for infrastructure maintenance.

Rabhi agrees that infrastructure maintenance needs to be part of the calculation, but that even accounting for that, there are still benefits of solar that are not included in the current net metering system — for instance, the economic benefits that come from reduced asthma rates. That’s why the Energy Freedom legislation’s fair value pricing system accounts for those external costs and benefits. Serna says that environmental benefits of solar panels has no place in the calculation of price, and that DTE is focused on compensating solar owners fairly for the power they produce, while making sure that they pay their share for grid maintenance.

John Wakeman, owner of SUR Energy, an Ann Arbor-based renewable energy contractor, believes that DTE will oppose any bill that threatens the current energy model, because that model works for them. “They’re a monopoly. Their idea of innovation is manipulating the government, lawyers and accounting, rather than a more traditional idea of business innovation.” Wakeman founded SUR Energy after being laid off from the manufacturing industry fifteen years ago — he calls the development of SUR “the classic Michigan story.”

Taxation without representation?

Wakeman says that a constantly shifting political landscape is the biggest challenge to Michigan’s renewable energy industries. The technology is great, but politics can really get in the way or encourage it.” The federal, state, and local policies dealing with renewable energy are difficult to navigate, and can discourage people from investing. Wakeman points out that in Ann Arbor, adding solar panels to your roof is taxed in the same way as a kitchen remodel is taxed, without accounting for the broader benefits of renewable energy. He adds, “The thing that really frustrates me in Michigan is that the people are saying time and again that they want this. I really think that our utilities have too much power.”

Wakeman works primarily with private homeowners; others in the state, like Soulardarity in Highland Park, are working to make renewable energy more accessible to renters. Soulardarity was founded in 2012 after DTE Energy repossessed over 1000 streetlights in the city. The nonprofit’s mission is to power Highland Park with solar streetlights, based on its mission statement principle of energy democracy, “the idea that the people most impacted by energy decisions should have the greatest say in shaping them.”

Jackson Koeppel, Executive Director of Soulardarity, a nonprofit promoting renewable community energy systems in Highland Park, says that the Energy Freedom legislation’s community solar gardens might be a step forward for energy equity. “Community solar is one of many great tools for energy democracy. It’s especially powerful because it allows renters – who often have the lowest incomes and the highest energy costs compared to income – to participate as owners of clean energy.”

Serna says that DTE offers green options, and cites the voluntary MIGreenPower program, where customers can opt to pay extra on their monthly bill for renewable power, as well as DTE’s overall goal to reduce carbon emissions by 80% by 2050.

Shifting the paradigm

Koeppel calls the renewable options offered by DTE “laughably inadequate,” and says that their methods in Detroit are only increasing energy inequity. “DTE is scooping up public land at firesale prices to build solar, then tagging a premium on to clean energy so that none of neighbors will be able to afford that power.” He adds, “For Michigan to move forward, DTE needs to change. And if they can’t do that, they need to get out of the way.”

Rabhi says that while the bill could improve the current energy model, ultimately, he’d like to see a new model in place. “In my ideal scenario, energy would be produced, regulated, and monitored by the people who consume it.” He indicates either a cooperative model (a company jointly owned by consumers, as in many areas of the Upper Peninsula), or a municipal model (direct voter and taxpayer control of utilities). Those systems, he says, create accountability, and invest money where it’s needed. Rabhi acknowledges that his Republican co-sponsors of the Energy Freedom legislation tend to see a different view of Michigan’s future, with a free market for energy production.

Wakeman, SUR Energy’s owner, agrees that there needs to be a change. “I’d like to see things move forward in a way that’s good for the people of Michigan and good for the planet, and not just good for the utility shareholders.”

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