Does requiring utilities to buy renewable energy help or hurt ratepayers?
Consumers Energy wants to stop buying renewable energy from outside sources.
Under the federal Public Utilities Regulator Policy Act (PURPA), state regulators can encourage more renewable energy by requiring utilities to purchase electricity generated by solar, wind, biomass, or other renewable sources at the same rate it would cost the utility to make it.
That helps Michigan to be less dependent on fossil fuels, and supports development of renewable energy sources.
Consumers Energy, which is one of Michigan Radio's corporate sponsors, is asking the Michigan Public Service Commission to let the company off the hook.
At the same time, U.S. Rep. Tim Walberg, R-Mich., has introduced legislation to change PURPA in a way that would let big utilities decline to buy green energy. Consumers Energy likes that – a lot.
Kevin Borgia doesn’t. He’s the Midwest policy director for Cypress Creek Renewables, a solar energy company that sells green energy to Consumers Energy under PURPA.
Listen to the interviews with Rep. Walberg and Kevin Borgia above.
Borgia thinks there is a real economic incentive to build solar infrastructure in Michigan, which he says would benefit of ratepayers and create jobs.
But if Consumers is allowed to decline buying energy, Cyprus would not be able to invest in Michigan to the degree they want to.
“If the proposals were to move forward as Consumers has recommended, we think that would really deprive us of a business opportunity, but also deprive Michigan of a great economic opportunity.”
Rep. Walberg argues the jobs aren’t going anywhere.
“It may not be Cyprus or some other company supplying it, but the jobs will be there,” he says. “But again, the key issue is to make sure that while we want to see jobs come into our state… we want to make sure that the ratepayers of Michigan, in my case the 7th District, pay no more than they have to for their energy.”
Consumers Energy says PURPA leads to higher power bills. Walberg says his proposal aims to change make the system more fair to ratepayers.
“All we’re saying is, let’s keep the competition going,” he explains. “Let’s make sure that the consumers are only paying for what they need and not at a higher cost.”
But Borgia doesn’t buy that argument.
“PURPA is about keeping rates low. The letter of the law specifically states that if a private developer generates power at a rate that is competitive with the utility’s cost to generate it, they have to buy your power. And it’s something that is about protecting ratepayers. It’s not about higher costs, it’s quite the opposite.”
Borgia adds that although PURPA is a 40-year-old law that could use some updating, he believes Walberg’s approach is moving in the wrong direction.
“We think in general, Representative Walberg’s bill seeks to move backward, away from competitive energy markets,” he says. “Again, PURPA is all about allowing private enterprise to find ways to compete with the existing, polluting energy sources. And without the opportunity for private companies to move forward with businesses in Michigan, and in other states, we’ll have a hindering of technological innovation.”
Unsurprisingly, Walberg disagrees.
“I don’t think it goes backwards at all," he says. "It keeps us right where we’re at, and moves forward, and attempts to upgrade…. We’re having discussions now on how do we move forward for the best benefit of the consumer, and ultimately, I think that’s what we in government ought to be concerned with, and I hope the industry would be as well.”