New Net Metering Proposal Causes Concern

The Michigan Public Service Commission has issued a proposal for a net energy metering (NEM)/distributed generation (DG) tariff per the requirements of Public Act 341 of 2016. In response to the call for comments, MCEF submitted the below statement regarding the proposal: 

The current MPSC staff proposal essentially creates a new rate structure based on an inflow/outflow model, where inflow is being evaluated consistent with a cost of service approach, while outflow is proposed to be calculated under a PURPA-based avoided cost model. Subsection 6a (14) of PA 341 states: 

Within 1 year after the effective date of the amendatory act that added this subsection, the commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements for customers who participate in a net metering program or distributed generation program under the clean and renewable energy and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211.”

MCEF entered the DG workgroup meetings with the expectation that MPSC staff would engage in a very straightforward process. Namely, and per the plain language of the statute, we expected the Commission to 1) conduct a standard cost of service study, 2) determine if NEM customers are being overcompensated for their actual cost of service to the utility by receiving a kWh-for-kWh credit for energy outflow (i.e. if NEM customers are being “subsidized” by non-NEM customers), and if the Commission found that NEM customers are being subsidized for use of the grid, then the Commission would 3) establish an “appropriate tariff”. 

We are deeply concerned that, to date, a more complex and incomplete process than what the legislation called for has taken place, with the result being an inadvisable approach: substituting a simple tariff instead with the proposed inflow/outflow model that applies different rates to the two directions of energy flow – retail rates for inflow, PURPA avoided costs for outflow. 

MCEF was deeply engaged in education and working with other stakeholders throughout the legislative process that produced the language of subsection 6a (14). The language, the legislative record established during debate on PA 341, and the intent of the Legislature are clear in providing direction to the Commission and staff. The statute does not authorize replacement of NEM/DG with a new, complex rate structure. It states that “the commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements…” It is our belief that this mandate has only been half completed. 

At the August workgroup meeting, the staff presented calculations on the inflow side demonstrating that residential solar DG customers have a lower cost of service than non-DG customers, approximately 16% lower. If this were the “end all” of the process, the Commission and staff would instead need to recommend, per the statute, that DG customers be assessed a credit rather than a tariff (or perhaps it would be called a “negative tariff”). Despite this finding, the staff recommendation at the December meeting appears to require DG customers to pay full retail rates for inflow, with no mechanism (credit, negative tariff, or otherwise) to capture the positive value DG customers provide to the grid. 

But the overriding point remains that the mandated cost of service study has not been completed on the outflow side. By proposing the PURPA-based avoided cost model for outflow as an alternative to a standard cost of service study, the Commission is not fulfilling the statutory requirement. It is safe to say that the Legislature expects a full cost of service study to be completed. Likewise, it is difficult to explain how the clear direction of subsection 6a (14) to recommend a tariff based on an equitable cost of service study comes back to the Legislature as a completely new, bi-furcated rate structure that would eliminate net metering as the body understood it when the law was passed, with no recognizable tariff included.

There is a myriad of concerns about moving to this dual-rate inflow/outflow model that were expressed during the workgroup meetings and in written comments submitted to the Commission by numerous stakeholders. MCEF will not restate them here. These concerns only multiplied with the staff’s proposal at the December meeting to use the PURPA rate as the foundation for outflow compensation. PURPA producers and residential DG customers are so structurally different and regulated under substantially distinct sections of laws, rules, and regulations, that equating them for rate purposes is difficult to justify. Based on comments, data, and analysis provided to the Commission over these many months, the result of using PURPA rates will undoubtedly be the inequitable treatment of DG customers. Our view is that the PURPA route should be abandoned. 

Despite the nature of these comments, MCEF remains confident that the Commission can readily address these concerns by focusing its immediate efforts on completing the “other half” of the cost of service study as it relates to outflow. The outcome of that study will provide the information and clarity needed for the Commission to fulfill its obligation under PA 341. An incredible amount of good work has been done through the workgroup process. Completing the cost of service study will allow that work to be brought to its best result. 

This blog post was taken from official public comments submitted by Ed Rivet and Larry Ward on behalf of MCEF on January 10, 2018.



The Electricity Interstate: Part I

Achieving the goals of our new energy laws
Michigan’s newly minted energy laws (Public Acts 341 and 342) require achieving no less than a combination of 35% renewable energy and energy waste reduction by 2025. Electric Utilities like Warren Buffett’s MidAmerican Energy, which in 2017 is expected to generate over 60% of its electricity from wind farms, have some of the lowest electricity rates in the nation. At the same time, however, local communities in Michigan are voting down new wind projects making it difficult for electric utilities to reach their renewable energy goals and for ratepayers to enjoy low electricity rates. Another pathway to achieving these goals is to import renewable energy from outside the state. This requires more of a “systems thinking” approach to provide low cost, clean, and reliable energy solutions. 

Systems thinking
The power grid, its generators and loads, are a “system” in which each component of the system interacts with the others and they are all interdependent. Systems thinking often results in strikingly different conclusions than one might normally expect when only looking at the individual parts of a system. In a well-designed system the whole can be greater than the sum of its parts. This makes it extremely effective in dealing with problems involving complex things, like electricity flows. Systems thinking in energy means we need to expand our view to take into account a much larger number of interactions, especially including interactions outside our state. It helps that Michigan is already part of the Midcontinent Independent System Operator (MISO), a 175,000 MW, 15-state regional electricity balancing system. 

The benefits of a large electricity balancing system
A large electricity balancing system allows for the possibility of many different electricity supply options. It is the total supply and demand within the balancing system that really matters. With a large grid with strong interconnections variations often cancel themselves out. When needed, you can borrow electricity from another part of the electricity balancing system, which helps to smooth out supply side and demand side variability. It is also much easier to accommodate a larger percentage of variable generation within a large electricity balancing system. In order to more fully take advantage of this relationship with MISO, there needs to be more and stronger transmission ties into the western MISO states, where there is also a lot of cheap - and clean - electricity. Just compare Michigan’s electricity rates with states in EIA’s East and West North Central regions.

HVDC Transmission and the Electricity Interstate
According to the US Energy Information Administration (EIA), in 2016 transmission costs represented only about 11% of the price of electricity, while distribution costs are 32% and generation costs are 57%. The EIA also estimates that electricity transmission and distribution losses average only 4.7% of the electricity that is transmitted and distributed annually in the United States. A High Voltage Direct Current (HVDC) transmission link can transmit 2500 MW of power at 800KV over a distance of 500 miles with a loss of only 2.6%. For lines of about 375 miles and longer, HVDC is cheaper than AC technology. For underground or underwater lines >50 mi HVDC is also cheaper than AC technology.  

Back in the 1950s, the US was connected haphazardly with narrow roads built by state and local governments. President Eisenhower predicted that cars would soon become ubiquitous so he hatched a plan for an ambitious expansion of the nation’s highways. These days we can predict that more low cost variable electricity generation is coming on-line, so why not invest in creating a new electricity interstate much like Eisenhower did to allow for more widespread and efficient car travel? This would provide Michigan ratepayers with access to a larger, cleaner, and more diversified electricity supply.   



MCEF Visits the National Renewable Energy Laboratory

The Michigan Conservative Energy Forum is a member of the Conservative Energy Network (CEN), a network of 18 state-based conservative clean energy and energy efficiency organizations seeking to educate conservative leaders and the public about the economic, security, and conservation benefits of renewable energy. Twice a year, CEN members get together to share insights, best practices, and strategies for the upcoming months. Our latest gathering was held the third week of July in beautiful Denver, Colorado.

While we were there, we had the amazing opportunity to tour the National Renewable Energy Laboratory (NREL) in Golden, Colorado. As we walked across the campus, our tour guide talked about the many ways that the buildings had been designed to maximize energy efficiency. Many of the buildings on NREL’s Golden campus have achieved either Leadership in Energy and Environmental Design (LEED) status or their energy usage is net zero (and sometimes both). Energy efficiency was a recurring theme of our tour. 

We spent most of our time in the Energy Systems Integration Facility (ESIF) which houses a number of laboratories, the High Performance Computing center, and the control room where experiments across the laboratories are monitored. Our first stop was the Insight Center Visualization Room, where we saw the advanced modeling tools being used for grid research. A constantly changing display of maps, charts, and graphs showed us a possible grid of the future, where energy from wind and solar are fully integrated.


From there, we went to the Collaboration Room, which has six projectors that illuminate one wall and the floor. In this room, researchers are able to experience in real time the testing and simulation of equipment and technologies ranging from molecular structures to wind turbines. Wearing 3D glasses, we were able to move around in the turbulent wakes of a multi-turbine array and see firsthand how the placement of multiple wind turbines in relation to each other affects their functionality.  


The tour continued with a look at Peregrine, NREL’s High Performance Computer (HPC). Not only is Peregrine the largest HPC system "dedicated to advancing renewable energy and energy-efficiency technologies", but it is also incredibly energy efficient. It uses warm-water liquid cooling and waste heat capture and reuse to reduce energy use, lower energy costs, and heat the entire ESIF.


The rest of the tour consisted of looking down into a number of laboratories from viewing areas on the floor above. We saw vehicles, generators, batteries, light bulbs, and appliances. These labs have already produced more than 800 patented or patent-pending technologies and they continue to conduct research and development in thirteen different programs. 

The National Renewable Energy Laboratory "advances the science and engineering of energy efficiency, sustainable transportation, and renewable power technologies and  provides the knowledge to integrate and optimize energy systems." We applaud the work they are doing and are grateful for the opportunity to visit the NREL site and see their innovation for ourselves. 

Note: All quotes are taken from the NREL website ( and photos are from the NREL Image Gallery (



A review of 2016 and looking forward to 2017

The Michigan Conservative Energy Forum had a stellar 2016 that culminated in Governor Snyder signing Public Acts 341 and 342 into law, a bipartisan-supported comprehensive energy package that is noteworthy for its efforts to increase homegrown, clean energy. Some of the successes in this package include:

1.  A combined 35% goal of renewable energy and energy efficiency deployment by 2025.

2. An increase in our successfully-met renewable portfolio standard (RPS) from 10% to 15% by 2021, an amendment introduced and advocated for by Senator Dale Zorn, whom eloquently stated, “Let’s show the state and the country that we are serious about green energy.”

3. Additional scope and funding for the Utility Consumer Participation Board to intervene in electric rate cases on behalf of ratepayers.

4.  Effectively maintaining the current solar net-metering program as is until 2020.

While there is still more work to be done on energy policy, these laws continue the positive strides to increase our use of renewable energy and energy efficiency that began with Public Act 295, which passed in 2008. As MCEF looks to our future educational efforts, we are focused on the ratepayer – allowing individuals a voice in the rates they pay and a bigger role in decisions regarding energy production and use.

Specifically in 2017 we look forward to working with policymakers, businesses, and allies to:

  • Ensure Michigan electric ratepayers are receiving commensurate reliability for the prices they pay.
  • Continue the successful solar net-metering program and remove barriers to localized power generation.
  • Champion the development of electric vehicle infrastructure and battery technology, utilizing our states vast expertise in the automotive and manufacturing sectors to do so.
  • Highlight the energy challenges facing Michigan's Upper Peninsula, and propose cost - effective, market-based solutions to ensure U.P. residents have consistent access to reliable and affordable electricity.

Focusing on the ratepayer, specifically including the ratepayer in decisions about Michigan’s energy future was a major theme at this year’s Catalyst Conference, in which we sought to “Chart Michigan’s Energy Future”. With the help of a panel of industry and ratepayer experts, I believe we made the pivotal first steps to do just that. Our third annual conference featured: Moderator Jim MacInnes, Chairman of the Utility Consumer Participation Board and Leadership Council member of MCEF; Marc Pauley, Commodities Manager at Granger Energy Services; Michael Moody, Assistant Attorney General and State Public Administrator; and Tyson Grinstead, Southeast Pubic Policy Director for Sunrun. The panel presentation can be viewed here

House Energy Policy Committee Chair Representative Gary Glenn was our keynote speaker. He did a wonderful job of highlighting the free market’s role in promoting clean and renewable energy as well as the importance of getting the government out of the way of progress. Glenn emphasized that he would work with his committee over the next two years to reduce electricity rates for Michigan consumers. Watch Representative Glenn’s speech here

I believe our Catalyst Conference will be just that – a catalyst for new ideas and a renewed interest in solving the energy challenges that face Michiganders each day. Our goal is and always has been about providing a forum for conservative energy solutions that embrace a cleaner, more affordable and more reliable Michigan energy future. I look forward to this journey and I hope you join us in the conversation in 2017 and beyond.



Energy Optimization


Energy Optimization

Post Written by Mark Huizenga, MCEF Leadership Council member & Board President

Energy efficiency is crucial to an “All of the Above” Michigan energy plan and it is one of the most effective ways to protect ratepayers, create jobs, and lessen our dependence on our natural resources. By utilizing energy-saving technology, we can help save money for our schools, hospitals, businesses and homes. 

The holidays are a great opportunity to discuss ways that we can become more energy efficient in our everyday lives.

As the Mayor of Walker, MI, I have seen first-hand the immense differences switching to more energy-efficient technology makes to a city’s bottom line – meaning more money in my residents’ wallets and a more efficient use of local taxpayer dollars.  The cheapest form of energy is the energy we don’t use. In fact, for every $1 spent on energy efficiency, $4 are saved, according to an economic impact study commissioned by the Michigan Conservative Energy Forum.

I have also seen how energy efficiency can save lives. My company, Key Green Solutions, provides a comprehensive energy, waste, water, food and carbon footprint calculator for hospitals in 22 states and one province. Key Green is rapidly being recognized as the premier sustainability management software suite for hospital systems across the United States. I am proud to help these hospitals effectively manage and decrease their energy use where it’s not needed. The money these hospitals save on their electric bills can then go towards hiring medical staff and buying life-saving medical equipment.

By optimizing how we use energy, we can build fewer power plants and move towards a cleaner energy future for generations to come.  A cleaner environment will also mean fewer health problems such as asthma, cancer, heart disease and stroke that are caused by pollution related to coal power plants.

I urge individuals and companies alike to learn how they can make a difference while saving money on their electric bills. Use the holidays to think about ways that you can become more energy efficient; it could be as simple as turning off the lights in a room no one is using or replacing your appliances with more energy-efficient models. Check out this list for more energy-saving ideas and put more money back in your pocket:

·        Use LED Christmas lights

·        Use a timer to automatically turn off your lights

·        If you’re buying your loved ones electronic Christmas gifts this season pick ones that have the energy star sticker

·        Reduce the amount of time the oven has to be on by baking several dishes at the same time Turn off overhead lights when tree lights are on

·        Use candles for decorative lighting



Thank you Senator Zorn!

Post written by Executive Director Larry Ward:

After a long year, with countless committee hearings and hard work on the part of the Senate to improve Senate Bills 437 and 438, an energy package that will affect Michigan’s energy future for years to come, the Senate voted on November 10th to pass the package and send it to the House of Representatives for consideration.

Now that we’re in the midst of a fall legislative break and waiting for the state House to take up these bills after Thanksgiving, the Michigan Conservative Energy Forum (MCEF) would like to take this opportunity to thank Senator Dale Zorn (R - Ida), a member of the Senate Energy and Technology Committee, for his amendment calling for an increased renewable energy standard. The Zorn amendment states that 15% of our energy must come from renewables by the end of 2021 – a 5% increase from our current standard of 10%, which we met in 2015.

Senator Zorn has continued to show leadership and argue for an increased commitment to renewable energy since May 2016, when during a Senate Energy and Technology Committee, he asked why a renewable energy standard wouldn’t be included in SB 438’s language alongside a more general goal of increasing the portion of renewable energy included in our state’s electricity mix. He suggested that the current 10% standard should be increased – but by a reasonable and achievable amount: “we keep talking about a goal of 30 or 40 percent or whatever the number might be but we do know that the green energy industry is changing very, very quickly and it’s good to have a high goal but it is only a goal. And I wonder if we should be looking at a goal at a percentage of 30, 40, 45 percent but also have in the mix to increase the percentage. We currently have 10% now and I wonder if we should have a mix with the goal and with an additional amount of maybe 5%... so that it shows to the state and to the country that we continue to move ahead with green energy but not have such a high number that it’s not achievable.”

Zorn was recently awarded the Michigan Energy Innovation Business Council Legislator of the Year for his work on this amendment and his championship of renewable energy in general. Likewise, MCEF wants to thank Senator Zorn for his leadership. We are glad to support legislators like him who take a stand for clean energy and promote an “all of the above” energy plan that is reliable, affordable, and promotes a healthier environment for generations to come.

Senator Dale Zorn (R - Ida)

Senator Dale Zorn (R - Ida)




We can all agree that increasing energy efficiency and transitioning to cleaner forms of energy are good things – the underlying question is always how do you pay for it?  Completing the smaller projects (i.e. the low hanging fruit) is generally a “no brainer”; the energy savings will pay for the extra cost within a year so it makes sense to do as a business or home owner.  Some of the larger, more expensive projects can be harder to finance though – how do businesses justify spending $250,000 on a project that’s not going to pay off for 20 years?  The standard options are taking out a loan or spending valuable cash on hand on these projects.  However, many companies or individuals do not want to do this because of the opportunity cost of not investing in much needed equipment or other improvements.  Fortunately independent groups have come up with solutions to that problem.

One of those solutions is a financing method called PACE (Property Assessed Clean Energy).  PACE has been in Michigan since 2012 and got its start in Ann Arbor. PACE has slowly been making its way to other Michigan municipalities & counties (current list of PACE locations here). If your municipality or county isn’t covered and you’re interested in implementing an energy efficiency or clean energy project contact your local elected officials to find out how you can get PACE where you live.

PACE provides ways for industrial, commercial, and even some residential properties to finance clean energy projects that cost over $250,000.  Your PACE project can be 100% financed and repaid in a period up to twenty years.  The main restriction to receiving this financing is that the project has to have a positive cash flow – in other words you have to save more in energy savings then the project costs you.

One of the advantages to using PACE as opposed to other financing options is if you decide to relocate your business or just sell the property the project was implemented on the next owner takes over the payments (i.e. the special assessment).   Another advantage is that the organizations that help you implement PACE financing can help you find the best ways to implement your clean energy or energy efficiency. 

If you’re looking for ways to make your business more energy efficient & cleaner, PACE may be an excellent route to use.  Please reach out to MCEF if you have any questions about how PACE financing works – if we don’t have the answers we can connect you with people who do!