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Mich. utilities resume calls for comprehensive energy legislation

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Mich. utilities resume calls for comprehensive energy legislation

Michigan'stwo largest electric and gas companies during their most recent earningspresentations renewed calls for comprehensive energy legislation to addressreliability challenges in the state.

executives expectMichigan's state legislature to resume talks on the energy bills as sessionstarts up in September. But progress on the bills could be delayed by a Nov. 8general election. State House members are up for reelection.

"SoI think there will be activity in the Senate and then there will be a chancethat something could get passed in the Senate…," DTE Energy Chairman andCEO Gerry Anderson saidduring the company's second-quarter 2016 earnings call July 26.

Theelection will be a distraction, DTE suggests. After September, "everybodywill watch the election and see what the election dynamics mean for theMichigan legislature with a possibility that we would pick back up and passlegislation in the lame-duck session at the end of the year," Andersonsaid.

expects "therewill be conversations in the short window before the election when the Senatecomes back into session. We don't expect that the House would take it up beforethat. But if the Senate can come to some conclusions before the elections thanin that lame duck, it's possible, but I would say that we don't think it'slikely," President and CEO Patricia Poppe said during the company's earnings call on July 28.

Senatebills 437 and 438 and House companion H.B. 4297 and 4298 passed out ofcommittee review but have yet to reach the floor of their respective chambers.The Senate is due to resume session on Sept. 6 while the House has scheduledsession to resume Sept. 7.

S.B.437 amends the state's Customer Choice and Reliability Act to requirealternative energy suppliers to demonstrate to the ,which operates the grid across 15 states including Michigan, that they have "dedicated,firm and physical electric generating capacity" to meet their customers'reliability needs, according to the bill as of July 1. S.B. 438 dealsseparately with the state's renewable energy mandates. The requirement for firmcapacity favors suppliers that purchase both capacity and energy.

Somealternative energy suppliers own wind plants in the state, but alternativeenergy suppliers, for the most part, do not have firm capacity because theyjust go to the wholesale markets to purchase power to meet commitments, DavidMengebier, senior vice president of governmental, regulatory and public affairsat CMS subsidiary ConsumersEnergy Co., said in a July 25 interview.

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Ifenacted, S.B. 437 would require alternative energy suppliers to procureavailable capacity to make up for plant retirements in Michigan and across MISO'sfootprint. Since 2008, a number of coal plants have retired. Consumers Energyon April 15 retiredits B. C. Cobbunits 4 and 5, J.C. Weadockunits 7 and 8, and its J.R.Whiting units 1-3 units, totaling 950 MW.

DTEin June announced the retirementof eight coal units, totaling 2,440 MW, between 2020 and 2023. DTE plans toretire another 1,000 MW between 2026 and 2030, DTE said in an .

Thebills also address cross-subsidization. State law currently limits 10% of autility's average annual load to come from competitive generation. The choicemarket leaves full-service customers paying for costs related to retail openaccess customers who switch from an alternative supplier back to a utility, ConsumersEnergy said in its April 21 self-assessmentof 2016-2020 capacity, filed with the Michigan Public Service Commission.

EnergyChoice Now, a coalition advocating for choice, said it thinks the energy bills "mightbe harmful," Wayne Kuipers, the coalition's executive director, said in anAug. 1 interview. "If we are going to close the choice market inMichigan, …everyone would pay higher rates because the utilities would not needto compete with anyone," he said.

S.B.437 limits retail open access participation to existing customers who electedto purchase from alternative suppliers as of Jan. 1, 2015.

Thestate since 1999-2000 was 100% open to competition but "2008 legislationto restrict choice was a compromise to incorporate renewable energy mandates,"Kuipers said.