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Michigan energy agency calls for legislative fix to boost energy efficiency

Michigan's energy agency is urging state legislators toremove limits on utilities energy efficiency spending, citing new for the Clean PowerPlan that showed significant cost savings from efficiency.

The state requires utilities to lower energy sales by atleast 1% per year, but utilities' spending is capped at 2% of their salesrevenue each year on such programs.

"It doesn't really make sense to take your best optionand restrict spending on it when you might have to then spend on your less goodoptions. This modeling shows that there is a very negative economic effectoverall to doing that on our overall energy costs," Agency for EnergyExecutive Director Valerie Brader said on a Sept. 26 press call that coveredupdate modeling results on strategies to comply with federal carbon standards.

The figures come from a report conducted by Synapse Energy Economics and paidfor by the state. The study found that energy efficiency can reduce costs toratepayers by as much as $4.9 billion, assuming a higher energy efficiencystandard of 2% per year under a mass-based compliance plan that includes bothexisting and new power plants.

The state's administration under Gov. Rick Snyder supportsfinding a policy pathway to a higher efficiency standard at 1.5%, Brader said,but does not necessarily feel that it has to put mandate in place to get there.

"We're open to discussing a variety of paths to get usto 1.5% as long as we can get there. And our current law makes it very, verydifficult to get there," Brader said.

Brader said the state also needs ensure that doing thiswould not create more costs for ratepayers.

A pair of bills already before the House and Senate call forenergy reforms including modifying the state's energy optimization standards.H.B. 4297 and H.B. 4298, both sponsored by state Rep. Aric Nesbitt, arescheduled to be heard by the House on Oct. 19. Companion bills S.B. 437 and 438are before the Senate, which is scheduled for session on Oct. 18. S.B 438,sponsored by Sen. John Proos, would eliminate the 2% spending limit placed onelectric utilities and replace the state's energy optimization program with anenergy waste reduction program. H.B. 4298 would require the PSC to use anintegrated resource plan to boost energy waste reduction.