Do we still need to require utilities to use other companies' clean energy? | Michigan Radio
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Do we still need to require utilities to use other companies' clean energy?

Feb 25, 2018

A Cypress Creek Renewables solar project.
Credit Cypress Creek Renewables

Cypress Creek Renewables has been lining up farmland in Michigan for more than a year now.

The object? Leases for enough land to install several hundred megawatts worth of new, emissions-free solar projects. Combined, that would equal the electricity output of a small coal-fired power plant.

But a bill introduced in Congress by U.S. Rep. Tim Walberg, R-Mich., could put a halt to those plans, as well as the plans of other renewable energy companies that want to set up shop in Michigan and states across the nation.

Modernizing PURPA, or gutting it?

Walberg's bill, the PURPA Modernization Act of 2017, makes significant changes to the 1978 Public Utility Regulatory Policies Act of 1978, which was authored by former Michigan Congressman Richard Vander Veen. 

As it stands now, PURPA requires monopoly utilities such as DTE Energy and Consumers Energy (a Michigan Radio corporate sponsor) to enter into contracts with clean electricity providers such as independent wind and solar farms, along with hydro and waste-to-energy projects, as long as the electricity these companies provide does not increase customers' bills.

"PURPA was intended to reduce U.S. reliance on fossil fuel," says Margrethe Kearney of the Environmental Law and Policy Center, "and to increase the diversity of our generating resources by having more small, renewable resources as a part of our system -- without increasing cost to customers. PURPA is, at its very core, an act that introduces competition into a monopolistic market."

But according to Walberg, PURPA is no longer necessary.

Arguments for weakening PURPA

"Energy markets have changed significantly over the last 40 years, and many challenges of that era no longer exist," says Walberg. He says renewable energy companies can simply sell their electricity to the grid now. 

But Kevin Borgia of Cypress Creek Renewables says in his experience, that's extremely difficult to do.

"Joining and transacting at one of these large regional electric markets is costly," he says. "Right? It's set up for mega-generators," not the smaller projects such as those proposed by his company.

Walberg also claims that PURPA is actually increasing customers' bills. However, when questioned, both Walberg and Consumers Energy, which supports the Walberg bill, were unable to explain how this is happening -- since PURPA requires that the renewable energy that's purchased be the same or lower cost as the utilities' own rates.

Changes to PURPA give utilities more control over renewable energy

The PURPA Modernization Act would allow utilities to decline new contracts with most renewable energy projects, by lowering the mandatory purchase requirement from 20 megawatts to 2.5 megawatts. 

That means utilities will not have to purchase the electricity from any project above 2.5 megawatts, which is a miniscule project compared to an average fossil fuel-based generator.

The act also allows utility regulators like the Michigan Public Service Commission to allow utilities to decline to purchase any outside-sourced renewable energy if they can prove it is not needed to meet customers' needs.

It's not that DTE Energy and Consumers Energy are against renewable energy. Far from it. They've pledged to reduce their greenhouse gas emissions by 80% by 2050 and 2040 respectively, which will require the companies to use significantly more wind, solar, and energy storage in the future.

Kearney of ELPC says the utilities' shift to acknowledging the need to reduce greenhouse gases is a very good thing -- but she says the utilities want to move towards renewables at their own pace, and they want to own the sources.

She says that pushes the timeline out too far.

"We need (renewable energy) now," she says. "And we need mechanisms like PURPA that insert that element of competition so that we can make sure that the utilities are feeling some pressure to keep their own prices low."

The PURPA Modernization Act of 2017 has been referred to the House Subcommittee on Energy. At this point, no hearing on the bill has been scheduled.