LANSING, Mich. — Four years after raising customers’ bills to meet mandates to sell cleaner power, Michigan’s biggest utilities are eliminating the fees or slashing them significantly.
Residential customers of DTE Electric may see their $3 monthly surcharge fall to 43 cents under a plan pending with state regulators. Consumers Energy’s 52-cent monthly fee for residential customers — which previously fell from $2.50 — could go away entirely next year.
The lower surcharges for green energy are cheering proponents who say they are another reason Michigan should make utilities sell more electricity generated from wind or other renewable sources.
“The major takeaway is that renewables are getting demonstrably cheaper and costing ratepayers less and less,” said Ryan Werder, deputy director of the Michigan League of Conservation Voters. “You have so much more of the state able to support wind power because of new technology and wind turbines, which opens up more opportunity and space for more efficient wind power.”
State law requires utilities to generate 10 percent of their power from sources other than fossil fuels by the end of 2015. To comply, they can charge up to $3 a month to residents, nearly $17 to smaller business and roughly $188 to industrial businesses.
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Business surcharges also would drop significantly under proposals from DTE and Consumers Energy, which control 90 percent of the state’s electricity market.
After voters rejected a ballot proposal last year to boost the minimum to 25 percent by 2025, Republican Gov. Rick Snyder appointed a fact-finding team that conducted seven meetings around the state.
The governor has said he favors making utilities produce a greater share of their electricity from renewable sources but has not decided how big the increase should be. He is expected to make a recommendation late this year, and the fact that the surcharges are falling may make going above the 10 percent mandate more palatable in the Republican-controlled Legislature.
In February, the state Public Service Commission reported that Michigan had seen more than $1.8 billion in economic investment because of the 2008 law mandating the development of solar, wind, biomass or hydropower. The agency also said the cost of renewable energy continues to decline and is cheaper than bringing new coal-fired plants online.
Coal mostly imported from Wyoming accounts for more than half of the state’s net electricity generation.
Consumers Energy and DTE opposed the ballot measure and are declining to say if they will get behind a higher renewable energy standard at this point. While agreeing that technology is improved, Consumers Energy says comparing wind to coal-burning costs is apples to oranges because wind is by its intermittent nature less reliable.
“It is producing power between 30 to 40 percent of the time compared to coal, natural gas and nuclear that are 90 percent plus,” spokesman Dan Bishop said.
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The Jackson-based utility adds that the main reason it can drop the surcharge from 52 cents to nothing is because it is speeding up construction of a wind farm in the Thumb region to qualify for a 10-year, $100 million federal tax credit. If not for the subsidy, the cost of renewable energy would not drop as much, according to the company.
“That’s a result of a government action,” Bishop said.
Michigan Energy Michigan Jobs, a coalition that supports higher renewable energy and energy efficiency requirements, counters that new natural gas, pipeline and other fossil fuel projects get more generous tax benefits not available to wind projects.
Another factor in eliminating or cutting the fees is better wind turbine technology. Consumers Energy’s Cross Winds Energy Park in Tuscola County is expected to have a higher capacity factor than initially planned, essentially allowing the utility to buy fewer turbines and produce the same amount of power.
Detroit-based DTE also is saving money.
“We’ve experienced lower costs to build our own wind energy parks, as well as for contracts to purchase power,” said Irene Dimitry, the utility’s vice president for marketing and renewables. “Contributing to that have been technology improvements that have led to better wind and solar energy production, as well as federal production tax credits that have offset our costs.”
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Those bending the ear of Snyder and lawmakers hope the shrinking surcharges speak for themselves when the debate over an energy law update heats up in 2014.
“Now is the time for policymakers in Lansing to come to the table … because it’s good for consumers and our economy,” said Julie Lyons Bricker, director of Michigan Interfaith Power & Light, a group of churches concerned about climate change.
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