2016 New State Energy Law

Senate Bill 437 and 438 passed the Michigan Legislature on December 15 and was signed into law by Governor Snyder on December 28, 2016. This new law is Public Act 341 and 342 and it made changes in multiple areas of Michigan’s energy sector including renewable energy. The following are the key highlights as it pertains to renewable energy:

Net Metering Changes. PA 342 changes all references to “net metering” to “distributed generation." Under Section 6a(14) of PA 341, the Act requires the Michigan Public Service Commission (PSC) to conduct a study and then propose a distributed energy tariff “reflecting the equitable cost of service for utility revenue requirements for customers who participate in a distributed generation program.” This energy tariff study must be completed by April 27, 2018. The Public Service Commission will then decide specifically what the distributed tariff will be for each regulated utility in Michigan, when each utility files a rate case after June 1, 2018. This process with the PSC takes about 10 months. Until the PSC completes this process, the net-metering rules established in 2008 are still in effect for those homeowners and business in that utility's operating area.

DTE and Upper Peninsula Power Company (UPPCO) were then first utilities to file a rate case after June 1, 2018. The Public Service Commission made their decision on May 2, 2019. See the separate article on this. The decision for UPPCO is expected May 23, 2019. For homeowners with solar in UPPCO's area, they will receive 8.04 cents (credit) per kWh for any solar electricity that is exported back to the grid.

Consumers Energy is expected to file their rate case in early 2020 and so a decision won't be made by the PSC until late 2020.

GLREA is actively participating in the PSC proceedings to determine this energy tariff.

Grandfathering of Existing Renewable Energy Systems. Section 183 of Public Act 342 establishes a time limit of 10 years for grandfathering of systems. So current solar owners and those that file the paperwork to their utility that they intend to install a system, prior to the effective date of the new tariff (for DTE customers it was May 9, 2019, for Consumers Energy customers it won't be until late 2020) will not pay this new tariff and will operate under the current net metering rules until the tariff begins, at which point they can stay under the old net metering rules for 10 years from the date of enrollment or switch to the new tariff.

The Renewable Portfolio Standard was increased by the new law in 2016 from 10% to 15% by 2021, with an interim increase of 12.5% by 2019. A goal was also enshrined into law that by 2025, 35% of Michigan’s energy shall be provided by renewable energy or by energy efficiency.

GLREA focused primarily on preserving net metering and increasing the renewable portfolio standard. Considering the content of the bills when first introduced and the final language (seven versions later) enacted into law, the Coalition of organizations and business that supported the expansion of renewable energy (including GLREA) did a great job of educating legislators and applying respectful but firm pressure to get the necessary language changes in the final bill that became law.

If you have questions about PA 341 and 342, or about the new distributed energy tariff, please contact GLREA’s Executive Director John Freeman at Jfreeman13@comcast.net.