DTE Energy’s new “Voluntary Green Power” (VGP) program allows customers to contract to increase their renewable-energy supply incrementally up to 100%. VGP rates recently received interim approval from the Michigan Public Service Commission (MPSC) under case U-20343.
DTE has now proposed how it will source renewable energy for VGP customers, as part of its Integrated Resource Plan (IRP) filing, MPSC case U-20471. Especially promising, the IRP describes a special VGP program for municipal governments.
Municipal VGP Basic Features:
DTE’s IRP case filing states:
The Community segment will likely include solar energy installed locally, potentially with an anchor municipal customer, that may also include subscriptions from members of the community. …. The Company has identified at least 10 municipal customers with sustainability, greenhouse gas, or carbon reduction goals, and has initiated conversations with many of them. Several municipal customers are interested in colocated renewable energy assets for their municipalities, depending on the cost of the assets.
Municipal customers are likely to be more interested in colocated renewables than in contracting for, say, wind power generated hundreds of miles away from city hall. However, the special features of the municipal program make the cost even more problematic than for other VGP customers.
Consumers Energy has received MPSC approval for a simliar VGP program, but has not proposed a municipal variant.
Concerns with the basic cost scheme of DTE’s VGP remain. Specifically, an industrial VGP customer will pay 4.3-4.5 cents per kilowatt-hour for renewable energy in addition to most of the standard electricity tariff for their rate class. They will avoid most of the fuel (e.g., coal or gas) cost embedded in the standard tariff, but will continue paying most of the capacity cost for conventional energy (broadly, the cost of building and maintaining coal, gas and nuclear plants). Net of these credits, based on 2018 tariffs and energy-market prices, for every 4.3-4.5 cents per kilowatt-hour they spend on renewable energy, VGP industrial customers will pay an additional 3.9 cents for conventional energy. In short, the “green energy” tariff charges industrial customers almost as much for conventional, fossil-fuel based generation as for renewables, forcing them to financially sustain a source of energy they want to see phased out.
The municipal VGP introduces additional cost issues: the VGP program tariff does not allow for rate adjustments based on special features of the municipal offering. For example, even if a municipality were to provide the land for a solar PV installation to DTE at no cost, the VGP tariff has no provision to allow those savings to be passed directly on to the municipality. In addition, it stands to reason that solar power generated across town incurs much smaller transmission costs than wind power generated hundreds of miles away, but once again the VGP program tariff does not pass those savings on to the customer.
Because DTE will auction off any spare fossil-fuel plant capacity freed up by VGP customers, there is no guarantee that overall carbon emissions will be reduced. Analogously, a car owner who trades in their gas-guzzler for an electric vehicle is reducing global carbon emissions only if the clunker is retired; if it’s sold to somebody else, no net global carbon reduction will be realized. While a private company may feel comfortable claiming carbon neutrality under this kind of arrangement, a public agency likely faces a higher standard to achieve true carbon reductions rather than allowing its carbon emissions to be shifted to somebody else.
Consumers Energy’s VGP program also allows the company to sell its disused conventional generating capacity to other utilities, resulting in no assured global carbon reductions.
Other IRP Issues for Municipalities
The IRP covers many other topics that may impact municipal costs or policies.
- Energy waste reduction targets
- Overall power generation mix, including coal-plant retirements and new solar and wind installations
- Distributed generation, in particular rooftop solar power
- Power purchases by DTE from third parties, including municipally owned facilities such as hydro dams.
Options for Local Governments
The City of Ann Arbor has intervened in DTE’s IRP case (U-20471) to challenge provisions of the VGP, as well as other aspects of the IRP. Other local governments are encouraged to support Ann Arbor’s intervention. Building a robust coalition of local governments will send a compelling signal to DTE, and the MPSC, that the VGP rates and program should be reconsidered.
Alternatively, anybody may submit public comments to any MPSC case docket, at no cost other than the effort of preparing the comments. Public comments do not carry the same weight as intervenor testimony and case briefings, and are seldom cited in case rulings and decisions. Comments may, however, encourage closer scrutiny of issues as part of formal case proceedings.
Contact: Rick Bunch, MI-MAUI director, firstname.lastname@example.org or (734)489-9633