未來能源研究所-從目標到法律：密歇根州電力脫碳制度化 From Goal to Law Institutionalizing Michigans Electricity Decarbonization 2024

FromGoaltoLaw:Institutionalizing

Michigan’sElectricityDecarbonization

IssueBrief24-07byMayaDomeshek—July2024

1.Introduction

InNovemberof2023,thegovernorofMichigansignedapackageofclimatebills(ExecutiveOfficeofthe

Governor2023)thatsetsa100percentcleanelectricitytargetfor2040,oneoftheearliestintheUnitedStates(CESAn.d.).In2020,thegovernorissuedanexecutive

ordersettingagoalforthestatetoreachnetzero

carbonemissionsby2050(ExecutiveDirective2020-102019);in2022,theMIHealthyClimatePlanwasreleased,outliningactionsthestatecouldtakeby2030towork

towardthatgoal(EGLE2022).Thestate’slargest

investor-ownedutilitieshadpreviouslysetvoluntary

decarbonizationtargets:DTEfor2050(DTEEnergy

2019)andConsumersEnergyfor2040(Consumers

Energy2020).Fall2023’slegislativepackageincludedsixpiecesoflegislation:SB271oncleanelectricity,HB5120onrenewablespermitting,SB277onsitingsolaronfarmland,SB273onefficientelectrification,SB519onhelpingworkerstransitionoutofthefossilsector,

andSB502ontheutilityintegratedresourceplanning(IRP)process.Thisbriefcomparestheprovisionsofthelegislationwiththestate’sexistingplanandutilityplanstoevaluatetheprogressthestatehasmadetoward

institutionalizingelectricitydecarbonization.

2.Background

Michiganisthesecond-highestelectricity-producing

stateintheMid-ContinentIndependentSystem

Operator(MISO)territory(afterILandexcludingTX)

(EIA2024).Itproducesaboutasmuchelectricityas

itconsumes(Figure1a),andin2022,itproduced29

percentwithcoal,22percentwithnuclear,35percentwithgas,andmostoftheremainderwithrenewables.Themajorityofitscapacityisgas(44percent)and

coal(21percent),butitalsohassubstantialnuclear,

pumpedstorage,andwind(Figure1b).Formorethan

adecade,thestate’selectricityemissionshavebeen

trendingdownward(Figure1c),largelythroughcoaltogasswitching.MichiganhashadaRenewablePortfolioStandard(RPS)since2008,originallytoppingoutat

10percentin2015.Aftera2012ballotinitiativefailed

toraisethegoalto25percentby2025(Ferber2012),thelegislatureraiseditto15percentby2021(Walton

2016).Giventhatsomeout-of-staterenewablesare

eligibleforcredittowardRPS,compliancewiththe15

percenttargetwasachievedwithin-staterenewablesonlygenerating11percentoftotalsales(Figure1a).Themajority(74percent)ofsalesinthestatearebyitstwolargestinvestor-ownedutilities,ConsumersEnergyandDTE(Figure1d).

Figure1.OverviewofMichigan’sElectricitySectorFigure1a.Generation(2022)

Figure1c.CO2Emissions

Figure1b.Capacity(2022)

Figure1d.ElectricitySales(2022)

Datasource:MichiganElectricityProfile2022(EIA2023).

ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization2

3.CleanGeneration

Theheadlineprovisionsofthelegislativepackage

aretheRPSandcleanenergystandard(CES).TheMIHealthyClimatePlancalledforreaching60percent

renewablesin2030(EGLE2022).TheNovember

legislativepackagecontainsamodifiedversionofthisplan:50percentRPSby2030,100percentcleanby

2040(SB2712023,§28(1)and§51(1)).Itincludesgas

withcarboncaptureandstorage(CCS)asaneligible

cleantechnology(SB2712023,§3(i)(ii))—likelybecauseDTEmodeledthatasits950MWoffirmpowerin2035aspartofits2022IRP(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.17,p.8).

ThelawalsoincludeshalfcreditforMichigan’slast

incineratoruntil2040,whenitmustretire(SB2712023§39(c));itisinGrandRapids(Buza2023).Allelectricityproviders(regulatedutilities,municipalutilities,rural

cooperatives,andindependentsuppliers)aresubjecttothecleanandrenewableenergyrequirements(SB2712023,§5(d)),Andeligiblefacilitiesmustbein-stateoreligibletomeetMISO“resourceadequacyobligations”(SB2712023,§29(1)).

Thelegislativepackagealsocodifiesstorage

deploymentgoalsandenablesfurtherdistributed

generation.TheMIHealthyClimatePlancalledfor

2,500MWofadditionalstorageby2030(EGLE2022),theexactrequirementultimatelyincludedinthe

law(SB2712023,§101).Thistargetissubstantially

higherthanthatproposedinutilityplans.DTEagreedto780MWofstorageby2030initssettlement

agreement(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section13).

ConsumersEnergyplannedfornoadditionalstorage

until2032initsIRP(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.243)

butagreedtoabatterydeploymentprograminits

settlementagreement(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,

section3).TheMIHealthyClimatePlancalledforan

increaseindistributedrenewablegenerationbutdidnotrecommendamechanismtoachieveit(EGLE2022).

Atthetime,Michiganlawdidnotrequireutilitiesto

allowdistributedgenerationofmorethan1percentoftheiraveragepeakload,arulereferredtoasa“cap”

ondistributedgeneration(Buza2023).Butthestate

begannegotiatingwithutilitiestoincreasetheamountofdistributedgenerationintheIRPprocess,getting

DTEtoagreeto6percentinthe2022settlement

agreement(InthematteroftheapplicationofDTE

ELECTRICCOMPANY2022,ItemNo.527,section15).TheNovemberlegislativepackageuniformlyincreasedthecapondistributedgenerationto10percent(SB2712023,§173).

4.FossilGeneration

TheMIHealthyClimatePlancalledforretiringall

coalunitsby2030andphasingdowngasgeneration(EGLE2022),butthelegislativepackagecontainednoconstraintsonfossilgeneration.IntheirlastIRP,DTEandthestateagreedthatitwouldretireallremainingcoalby2032(BelleRivercoalconvertedtogasin2024;

Monroe1&2and3&4retiredbytheendof2028and

in2032,respectively)(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,sections2and3).Althoughtheutilitydoesnotplantoreduce

gasgenerationbeforethelate2030s(Inthematterof

theapplicationofDTEELECTRICCOMPANY2022,ItemNo.17,p.5),itdoesplantoretireoneofitsgaspeakers(StClair)in2024(Inthematteroftheapplicationof

DTEELECTRICCOMPANY2022,ItemNo.527,section17).Thestateandutilityagreedtosecuritize1.045billionofthecostsoftheBelleRiverconversionandMonroe

closuresandtreattheremainderasaregulatoryasset(InthematteroftheapplicationofDTEELECTRIC

COMPANY2022,ItemNo.527,section4),whichmeansthatanyremainingdebtontheplantsstaysintheratebase.DTEalsoenvisionsanewgasCCSplantin2035(InthematteroftheapplicationofDTEELECTRIC

COMPANY2022,ItemNo.17,p.8).

ConsumersEnergyplannedtoretireallcoalby2025(Karn1&2in2023;Campbell1,2,&3in2025)(In

thematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.7).Tomakeupforthelostcapacity,itplanstobuyagasplantownedby

ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization3

anindependentpowerproducer1andwillretiretwo

additionalgasandoilunitsin2031(Karn3&4)ifnot

neededassystemsupportresources(InthematteroftheapplicationofConsumersEnergyCompany2021,Item

No.901,sections2and4).LikeDTE,ConsumersEnergyreceivedpermissiontorecoverthecostsofCampbell

anditscoalashandcleanupasaregulatoryasset(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section5).

Theseplans,ifcarriedout,shouldleaveMichiganwithessentiallyzerocoalcapacityafter20322butfallshortoftheMIHealthyClimatePlan’srecommendationtoretireallcoalby2030andreducegas.

5.SitingandPermitting

Thelegislativepackagecreatesauniformpermitting

systemforrenewableenergythroughoutthestateandeasesthewaytositingsolaronagriculturalland.The

MIHealthyClimatePlanonlysuggestedthatthestate“supportlocal…governmenttoadoptbestpracticesforsitingrenewableenergysystems”(EGLE2022,p.35).

ThelegislationgoesmuchfurtherandcreatesauniformrenewablepermittingsystemthroughtheMichigan

PublicServiceCommission(MPSC).Itsetsuniform

healthandsafetystandards,includingsetbacksand

limitsonnoise,light,andshadowflickerforpropertiesthathaveenteredintoagreementswithdevelopers

(‘participatingproperties’)andthosethathavenot

(‘nonparticipatingproperties’)(HB51202023,§226(8)).

Forlocalitiesthathavesitingordinancescompatible

withthestate-levelone,developersmustapply

throughthelocality(HB51202023,§223(3)).Ifthe

localgovernmentdeniestheprojecteventhoughit

complieswiththestatewiderule,thenthedevelopercanapplyforapermitthroughtheMPSC(HB51202023,

§223(3)(c)and§223(5)).Thelawoutlineswhatsuch

anapplicationtotheMPSCshouldlooklike—includingproofofcommunityoutreachandajustificationforthe

choiceofsiteifitisagreenfieldinsteadofabrownfield(HB51202023,§225).Thelawincludescriteriafor

approval,includingcompliancewiththehealthandsafetystandards(HB51202023,§226(8)),laborstandards

(HB51202023,§226(7)(e)),noticeandcommentfor

thelocality(HB51202023,§226(2)),ahostcommunityagreementorcommunitybenefitsagreement(HB51202023,§227),and“consider[ing]andaddress[ing]”harmtotheenvironment(HB51202023,§226(7)(c)).

Asecondpieceoflegislationeasesthewaytositingsolaronfarmlandbyallowingitonfarmlandthathasenteredintoa“developmentrightsagreement”withthestate,

whichisatypeofagreementwhereinthelandownerandthestateagreetomaintainthelandundevelopedforaperiodofyears)(SB2772023).

6.Electrification

Thelegislativepackagemakesstridestowardbuildingelectrificationbutdoesnotsetfirmtargetsinthe

buildingandtransportsectors.TheMIHealthyClimatePlancallsforbuildingoutcharginginfrastructurefor

2millionelectricvehicles(EVs),addingEVsubsidies,

reducinggreenhousegasemissionsinthebuilding

sectorby17percentby2030(withoutidentifyingthebaseyear),andincreasingthetargetsofthestate’s

EnergyWasteReduction(EWR)program(EGLE2022).ThelegislationdoesnotaddressEVs,butitexpandsontheEWRprogramtoencouragebuildingelectrification.

Michigan’sEWRprogramissimilartoenergyefficiency

programsinotherstates,andpriortothepassageofthenewlawrequiredelectricutilitiestoreduceelectricity

salesby1%eachyearrelativetotheprioryear’ssalesandgascompaniestoreducegassalesby.75%eachyear.3

Thenewlawencouragesbuildingelectrificationby

defining“efficientelectrification”asatypeofEWR(SB

2732023,§71and§72(1)).Ifanelectricorgasutilityhelpsacustomerreplaceagasfurnacewithanelectricheat

pump,theutilitygetscreditforthedifferencebetween

1Itproposedbuyingfoursuchplants(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.10),butthestatenegotiateditdowntoone(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section2).

2MichiganwouldstillhavetheMSCSebewaingcoalplant(1.5MW)andtheMunising(Cogen)coalplant(6.2MW),whichpowersapapermill(GlobalEnergyMonitorn.d.;GridInfon.d.).

3M.C.L460.1077(1)and(3),(2008)(modified2023),nowSB2732023,§77(1)and(8).

ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization4

theenergyconsumptionoftheoldapplianceand

thatofthenewoneeventhoughelectricitydemand

increases(SB2732023,§77(4)).ThelawalsoincreasestheEWRrequirementfrom1percentto1.5percent

forelectricutilities,withagoalof2percent(SB273

2023,§77(2)),andfrom0.75percentto0.875percent

forgasutilities(SB2732023,§77(8)).Utilitiesreceive

compensationbasedontheirperformanceinmeeting

orexceedingthetarget(SB2732023,§75(2)).IfelectricutilitiesmetalltheEWRwithefficientelectrification

measures,demandcouldgrowbymorethan2percentperyear.ThelegislationalsorequirestheMPSCtostudyelectrificationasameansofreducingCO2emissions

(SB5022023,§6t(1)(j))andsothatitcansetdemandgrowthprojectionsthatutilitiesmustconsiderinfutureIRPs(SB5022023,§6t(1)(f)).

7.Affordability

Thelegislationdoesnotdirectlyaddressaffordability,

butitdoesstronglysupportlow-incomeenergy

efficiencyandelectrification.TheMIHealthyClimate

Plancallsfor“develop[ing]andexpand[ing]utility

programstoensurenolow-incomehouseholdis

spendingmorethan6percentoftheirannualincome

onenergy”(EGLE2022,p.36).Thishasbeenan

askofMichigan’senvironmentalandenergyjustice

movementsinceatleasttheDetroit’sPeopleand

EnergyCoalition’scampaignagainstDTEshutoffsin

theearly2010s(Rector2023).Householdswithincomelessthan30percentoftheareamedianincomespend18percentoftheirincomeonenergycomparedto3

percentforthestateaverage(DOEOfficeofStateandCommunityEnergyProgramsn.d.).Likemoststates,

Michiganprovidessomeassistanceforlow-income

electricityconsumersthroughtheLow-IncomeHome

EnergyAssistanceProgram(LIHEAP)(Energyand

Weatherization2024)andoccasionalrequireddonationsfromtheutilities.4Thenewlegislationdoesnotaddressthisconcern.Itdoes,however,offerstrongincentivesforelectrificationinlow-incomehouseholds;inparticular,itrequireselectricutilitiestospendatleast25percentof

EWRmoneyonthem(SB2732023,§80(3)).Itallowsthe

useofsuchmoneyforhealthandsafetyinvestments“thatareimpedimentstoimplementingenergy

wastereductionmeasuresforlow-incomeresidentialcustomers”andprovidesamonetaryincentivefor

doingsothroughperformance-basedcompensationthattreatshealthandsafetyinvestmentsasthough

theysavedthesameamountofenergyperdollaras

theutility’saveragedollarspentonEWR(SB2732023,§80(2)).

8.EnvironmentalJustice

Thenewlegislationcodifiestheconsiderationof

environmentaljustice(EJ)inutilityplansandincreasesopportunitiesforpublicparticipationintheIRPprocess,butitdoesnotforbidincreasesincumulativeimpacts

thewayNewYorkandNewJersey’snewEJlawsdo

(S8830NY2022;S232NJ2020)andevenpartially

creditsalandfillwastefacilityintheRPS,anaction

opposedbyEJorganizations.Sincea2019executive

order(ExecutiveOrder2019-062019),MichiganhashadanofficeoftheEnvironmentalJusticeAdvocatethathasbeenhelpingtodevelopthestate’sEJscreeningtool

(EGLE2022).TheMIHealthyClimatePlandescribes

EJas“astheequitabletreatmentandmeaningful

involvementofallpeople,regardlessofrace,color,

nationalorigin,ability,orincomeinthedevelopmentandapplicationoflaws,regulations,andpoliciesthataffecttheenvironment”(EGLE2022,p.16)andrecommendsastate-levelJustice40initiative,arequirementforEJanalysisinIRPs,andincreasedfundingfortheutility

consumerrepresentationfund(EGLE2022,p.31).

Thelawfollowsthroughonthepublicparticipation

andIRPrecommendationsfromthePlan.Itupsthe

amountofmoneygoingtotheutilityconsumerpublic

participationfundto$2millionanddirectstheboard

toemphasizedistributiontoEJorganizations(SB5022023,§6m).ItalsorequirestheMPSCtoholdfourpublicmeetingsannuallythroughoutthestateandstarta

docketonpublicparticipationandtransparency(SB

4TheConsumersEnergysettlementagreementrequiresthecompanytosetaside$5millionin2022and$2millionayearduringthelifeofthecoalregulatoryassetforlow-incomebillassistance(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section13).TheDTEsettlementagreementrequiresthecompanytopay$30milliontoorganizationsthat

providepaymentassistancetolow-incomeratepayersoverthelifetimeoftheregulatoryassetportionoftheretiredMonroecoalplant(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section20).

ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization5

5022023,§6aa).AlthoughthestatehadalreadybegunrequiringutilityanalysisofEJthroughsettlement

agreements(Inthematteroftheapplicationof

ConsumersEnergyCompany2021,ItemNo.901,section17;InthematteroftheapplicationofDTEELECTRIC

COMPANY2022,ItemNo.527,section23),thelaw

codifiesthispractice.ItrequirestheMPSCtoidentifyEJcommunitiesona4-yearcycle(SB5022023,§6t(1)(k));IRPstoincludeEJanalysisofanyconstruction

ofanewgasplantandthecontinuedoperationor

retirementofpeakerplantsinEJcommunities(SB5022023,§6t(5)(p));theMPSCtogetanadvisoryopinionfromtheDepartmentoftheEnvironment,GreatLakes,andEnergy(EGLE)onwhethertheIRPredressesharmtoEJcommunities(SB5022023,§6t(7)(a)(iii)(F));anditaddsasacriterionforapprovalthattheplanmitigatedisproportionateimpacts(SB5022023,§6t(8)(e)).

9.Conclusion

Michigan’sNovemberpackageofclimatelawstakessubstantialstepstowardthegoalsoutlinedinthe

MIHealthyClimatePlan.TheRPSandCEScodifyamodifiedversionoftheonerecommendedinthePlan.

Thepermittinglawcreatesauniformsystemthroughoutthestatethatwillmakethebuildoutofrenewables

easier,farbeyondthatenvisionedbythePlan.IncludingefficientelectrificationmeasuresintheEWRprogram

willhelpthestateelectrifybuildingsandreducecosts

forlow-incomehouseholdsthatreceiveretrofitsthroughtheprogram.ThereformstotheIRPprocesswill

increasepublicparticipationandconsiderationofEJinawaythatbeginstomeetthePlan’scommitmentstoEJ.

Thelegislationdoesnotmakeanyfirmcommitmentsaboutfossilgenerationandevenenvisionsaroleforit,whencoupledwithCCS,inthefuturecleangrid,butexistingagreementsbetweenthestateandutilities

shouldretirealmostallcoal-firedgeneratorsby2032.Itdoesnotsetfirmelectrificationtargetsordealwithelectrificationoutsideofthebuildingsector.Itdoes

nottakeanystepstowardthegoaloflimitingenergyexpenditurestonomorethan6percentofincome,asoutlinedinthePlan.Thelegislativepackagegoesa

longwaytowardcodifyingandexpandingupontheMIHealthyClimatePlan;futureprogresswilldependonimplementation.

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ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization7

Table1.ComparisonofStateClimatePlan,UtilityPlans,and2023CleanEnergyLaws

2022MIHealthClimatePlan

Recommendations(EGLE2022)

UtilityPlans

2023Legislation

Clean

Generation

60%renewable(50%RPS)by2030

DTEtoreach0by2050(DTEEnergy2019);ConsumersEnergytodosoby2040(ConsumersEnergy2024)

Sets50%RPSby2030(SB2712023,§28(1)),

includingwasteincinerationuntil2040(SB271

2023,§39(c));sets100%CESby2040(SB271

2023,§51(1)),includingCCS(SB2712023,§3(i)(ii))

2,500MWstoragetargetby2030

DTEtobuild780MWby2030(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section13)

Requires2,500MWstorageby2030(SB2712023,§101)

Increasingdistributedrenewable

StatenegotiatedwithDTEtoincreasedistributedgenerationcapto6%

Requiresutilitiestoallowdistributedgeneration

generation

(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section15)

upto10%ofaveragepeakload(SB2712023,§173)

Fossil

Generation

Retiringcoalby2030

DTEtoretirecoalby2032(InthematteroftheapplicationofDTE

ELECTRICCOMPANY2022,ItemNo.527,sections2and3);ConsumersEnergytodosoby2025(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.7)

—

Planninggasphaseout

DTEtoretirecoalby2032(Inthematt