Michigan's New Energy Plan Calls for 10 Percent Renewables by 2015

February 12, 2007

Michigan Public Service Commission (PSC) Chairman Peter Lark submitted the state's new energy plan to Governor Jennifer Granholm on January 31. It calls for all retail electric energy suppliers to obtain 10 percent of their energy supplies from renewable energy resources by 2015.

Lark filed the plan in response to an executive directive issued by the governor in April 2006, in which Granholm called for a comprehensive strategy to provide reliable, clean, and affordable power to meet Michigan's future electric energy needs.

The plan recommends that the state’s energy needs be met through a combination of renewable resources and the cleanest generating technology, with significant energy savings achieved by increased energy efficiency. In a press release, Lark said, "By acting now to incorporate renewable resources and energy efficiency measures into our supply portfolio, we reduce our exposure to the expensive environmental costs associated with traditional power plants, and also reap the benefits of cleaner air and water."

The proposal would require all retail electric energy suppliers to obtain at least 10 percent of their energy supplies from renewable resources by 2015. The standard would provide protection from volatile electric energy markets, and provides protection from costs associated with expected federal taxes on greenhouse gas emissions.

Michigan's load growth is expected to increase an average of 1.2 percent per year over the next 20 years. Modeling shows new baseload power plants will be needed no later than 2015. However, no Michigan utilities have undertaken baseload construction in almost 20 years and the average age of the state’s power plants is 48 years old. Given the current capacity of Michigan’s power plants and the expected load growth, the state must consider constructing new power plants within the next 8 years.

Against this backdrop, the governor’s plan recommends a new approach to utility-built generation in which a utility would submit a planning document that includes renewable resources, energy efficiency measures, power available from external markets, and existing traditional generation to meet forecasted demand. If the utility demonstrates a need for a new baseload plant, the PSC may approve it by issuing a certificate of need. The utility would then be required to competitively bid the construction costs to ensure customers the lowest price.

The energy plan also calls for creation of a Michigan energy efficiency program. This program would cost the average residential customer about 50 cents per month and fund energy efficiency measures and energy efficiency education throughout the state. "The energy efficiency program will save Michigan's citizens $3 billion over the next 20 years — the cost of two new power plants," Lark said.

For more information, see the January 31 PSC press release.