Bipartisan Energy Freedom Bills Empower Michiganders to Produce Clean Energy

Legislation provides for net metering, fair value pricing and community energy co-ops
Thursday, September 3, 2015

LANSING – State Representatives Jeff Irwin (D-Ann Arbor), Ed McBroom (R-Vulcan), Scott Dianda (D-Calumet) and Gary Glenn (R-Midland) today introduced a package of bills to remove barriers to renewable energy production for homeowners, businesses, farms, congregations and others. The Energy Freedom legislation would create sensible policies for net metering, fair value pricing and investment in community energy cooperatives by removing red tape to generating energy. The legislation blends pro-consumer reforms with a market-based approach, ensuring that energy producers receive a fair and competitive price.

“As Michigan’s highly successful renewable energy standard expires this year, the Energy Freedom legislation is a bipartisan, bipeninsular effort to continue shaping our state’s energy future for the better,” said Rep. Irwin. “We should be encouraging people to produce clean energy right here in Michigan, not encumbering them with bureaucratic rules. The Energy Freedom bills would remove barriers to renewable energy production for homeowners, business owners and nonprofits across the state.”

Michigan currently limits the number and size of net metering projects so customers only generate what they use. As renewable energy production grows, the net metering program is expected to reach its limit and shut out new customers within a few years unless the cap is lifted.

“My bill would streamline net metering rules that govern how much energy consumers feed back into the grid, empowering more people in our state to become independent energy producers,” said Rep. McBroom. “Better net metering rules would especially benefit rural areas and allow farmers the opportunity to realize untapped opportunities for wind, biomass and methane digesters on their land.”

Another bill in the package sets up a framework to allow members to buy shares of a renewable energy system and receive a monthly bill credit for their shares’ output. While other states have enacted similar policies focusing on solar, this bill provides broad opportunities to invest in any renewable energy source.

 “Everyone should have the opportunity to invest in renewable energy, even if they can’t install a system at their own home or business,” Rep. Glenn said. “The community energy bill would enable a wide range of people to share the up-front costs and long-term benefits of producing renewable energy, keeping more of our energy dollars here in Michigan. It’s pro-jobs, pro-environment and pro-freedom.”

In addition, two of the bills create a framework for pricing the power generated by consumers and put back on the grid using a market-based approach to ensure both the customer and the utility are fairly compensated and addressing concerns that the cost of integrating distributed generation would otherwise be subsidized by other customers.

 “In the western U.P., distributed generation makes sense because in some parts of the region, we have very few homes and businesses per mile of transmission line,” said Rep. Dianda. “We should be encouraging businesses and residents who want to generate their own energy from any of the U.P.’s abundant resources, including geothermal heat from the mines, woody biomass or solar energy. Such policies will help strengthen our energy infrastructure and provide much-needed jobs.”

Energy Freedom is aimed at dismantling the regulatory and legal barriers facing homeowners and businesses who want to take advantage of these opportunities as a way to produce clean energy and become energy independent. New technology has made renewable sources competitively priced and sometimes even cheaper than coal and natural gas. This tipping point represents an opportunity for Michigan’s economy and its environment.

“As a small-business owner, I’ve seen first hand how clean energy creates jobs in Michigan,” said Dave Friedrichs, president of Homeland Solar. “The Energy Freedom bill package will spark business, spur job creation and save Michigan families and businesses money-building on the success of our clean energy sector.”

Energy Freedom Bill Proposal

The Energy Freedom bill package streamlines the process for businesses, farmers, residents, or places of worship to offset their energy cost by generating their own renewable energy and receiving a fair and competitive price. By balancing out one’s energy costs, it gives people and organizations more freedom on how to spend their hard-earned money. These bills also help improve our economic stability, provide good-paying jobs, enhance the use of cleaner sources of energy, and create a healthier Michigan.

Net Metering Enhancements

Sponsor: State Representative Edward McBroom

Right now over one thousand people in Michigan offset their energy costs by producing their own renewable energy. Under the current net metering program, the number of participants are capped and it is estimated that the program will max out within a few years.  

This bill removes that cap and allows more people to safely become energy independent. Participation will be based solely on meeting the interconnection and equipment requirements. Participants are compensated through a credit on their bill.

Community Renewable Energy Gardens

Sponsor: State Representative Gary Glenn

This bill package provides another option for individuals, organizations, businesses, places of worship, utilities, or others to leverage their renewable energy investment and energy producing potential through a Community Renewable Energy Garden. Members would buy a share of the garden and receive a monthly bill credit for their shares’ output. Additionally, the investor-owned utilities would enter into an agreement to purchase the garden’s energy production.

Fair Value Pricing (up to 500 KW)

Sponsor: State Representative Jeff Irwin

As technology has advanced in the renewable energy market, the cost for businesses and residents to generate their own renewable energy has gone down. This bill ensures that residents, businesses, farmers, or places of worship who invest in generating renewable energy receive a fair price for the energy they produce. Under the current net metering program, electric retail customers who generate renewable energy are compensated through a bill credit. Fair Value Pricing ensures that homeowners and businesses get paid what utility companies would pay themselves for producing renewable energy.

Under this bill, the Michigan Public Service Commission would establish the distributed generation value methodology used to set the fair value price for up to 500KW. Under this model both the generating customer and the utility are fairly compensated. The Fair Value Price methodology accounts for the value of the renewable energy, its delivery, generation capacity, transmission capacity, transmission and distribution line losses, environmental value, and other values that are not always considered in current energy prices. The generating customer would enter into a contract with the utility and receive this rate for an agreed upon period of time.

Fair Value Pricing (over 500 KW)

Sponsor: State Representative Scott Dianda

This bill would extend fair value pricing beyond 500KW and include options for combined heat and power. It would also create a pricing methodology that does not include the transmission for energy put back on the grid in excess of what is consumed on site. Utilities would have the option to decline net metering if the generating system is over 500 KW and there is a fair value price or standard offer contract available.