With approximately half of its electricity coming from coal-fired generation, how is Michigan preparing for U.S. EPA's pending regulations for existing power plants? During today's OnPoint, Commissioner Greg White, a member of the Michigan Public Service Commission, discusses the future of his state's renewable portfolio standard and the role of coal in its energy future. He also talks about recent court action on the Federal Energy Regulatory Commission's Order 1000.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Commissioner Greg White, a member of the Michigan Public Service Commission. Commissioner, thank you for coming on the show.
Greg White: Thank you for having me.
Monica Trauzzi: Commissioner, oral arguments were recently heard in a FERC Order 1000 case, and we're still waiting on judgment from the D.C. Circuit Court of Appeals on whether this rule will be upheld. But you believe that this is really just the tip of the iceberg in terms of court action on Order 1000. How do you see this story line evolving?
Greg White: Well that's a great question. You know obviously we don't know how the court is going to rule, and you know depending on how the court rules, we'll have to evaluate that and make decisions going forward whether we seek to -- you know if the court upholds the rule, we could either seek to appeal; we could seek perhaps legislation. I think more importantly, though, even if the court upholds the first rule in this instance, I don't believe that that necessarily means that it's the correct policy. And so I'm hoping that there will be an opportunity at the FERC level and within the industry within our regulatory community to revisit this and take another look at it. It's an order that was issued, it's a policy that was issued that seems to have since already become obsolete in a sense.
Monica Trauzzi: Why do you say obsolete?
Greg White: Well because the industry has changed even dramatically since the order came out. Renewable energy development is happening; we support that wholeheartedly. But it's being done in a way that doesn't necessarily require ordering long-haul transmission. We've found more cost-effective, more efficient superior policies at the local levels, at the state levels, that are accomplishing the same objectives without mandating the kinds of high costs that are associated with building these types of transmission systems.
Monica Trauzzi: So the concern you're expressing is not just about how FERC has gone about implementing Order 1000, it is with the actual rule?
Greg White: Well we certainly have concerns with the rule, but I testified before Congress in 2010 after the rule came out. And you know while stating we didn't feel it was necessary, we supported the planning because we're due planning. Planning is something we do. Regional planning, state planning is something we're extremely involved in. However, the devil's in the details, and it's been in the compliance filings, the orders on compliance that we are seeing that the FERC is deviating from the intent of the rule as it came out.
Monica Trauzzi: And so do you anticipate future legal action in terms of these compliance filings?
Greg White: I would have to assume that there will be. And just for example, in the PJM region, which Michigan is part of as well as the Midcontinent Independent System Operator, we came up with a scheme for allocating costs based on the benefits of you know the customers. And the FERC didn't adopt it; they sent it back and said that we had not spread these costs broadly enough. And it seemed to me when you have a group of states and other stakeholders coming together, which is what the FERC's Order 1000 directed us to do in proposing an arrangement that everybody agreed to, to have the FERC then say well that doesn't go far enough just seems like they're really overstretching on this.
Monica Trauzzi: Michigan is a coal-heavy state, about 56 percent.
Greg White: About 50 percent, yeah.
Monica Trauzzi: Yeah, [about 50 percent] of your electricity comes from coal. With EPA's pending regulations on existing sources, how is your state preparing for its energy future and these regulations?
Greg White: Well we're doing several things in Michigan. First of all, we are working with our utilities. We're looking and evaluating our system; we've been doing this for quite some time. There will be retirements of several coal units. We're developing renewable energy resources. In my view we've had tremendous success in Michigan, much greater than we thought when we established our renewable portfolio standard back in 2008. So we're really doing several measures, energy efficiency, aggressive energy efficiency programs you know that will help us maintain compliance. We've reduced our greenhouse gas emissions since 2005 by almost the standard that we are expecting to see come out of this rule, somewhere in the range of 16 percent already. So we feel like we're doing these things already.
Monica Trauzzi: So you expect a seamless transition?
Greg White: I don't know about seamless; we certainly have concerns. The time frames that are being projected in the 111(d) section will push us in a way that has us concerned with reliability and our ability to maintain reasonable costs.
Monica Trauzzi: You mentioned your state's renewable portfolio standard. It's coming to an end, so what policies need to be in place to keep the momentum on renewable energy going?
Greg White: Well it's pretty universally held in Michigan that this has been successful, like I said, even more so than we'd anticipated when we put this standard together. So we've spent 2013, the Public Service Commission and the Michigan Economic Development Corporation hosted a series of forums around the state to gather information, gather data from all the various stakeholders. We're using this year to analyze that. We have work groups that are going on right now to look at that even further and you know kind of drill down with the idea that this will inform the governor and inform the Legislature in 2015 when they have an opportunity to review these laws.
Monica Trauzzi: What about solar? What more can be done to bring solar online in your state? It continues to lag behind wind. There are other states in the region that are taking steps to advance solar. What can you do?
Greg White: Well I think we're on the right track. First of all, we have a net metering program. We are a state that has a net metering program. It's modest, and some would argue that our renewable portfolio standard is modest as well, although if you look at the total megawatts that are being produced, it's larger than states with even larger percentage. So we're pretty aggressive in our investment in these areas. But you know the cost effectiveness of solar is really just becoming more and more cost-effective today, and so we're recognizing that. We have several big projects, whether they be utility projects, whether they be customer-owned projects that are being developed. And so I think it won't be long before Michigan doesn't lag so far behind. I think we were just perhaps being careful not to get too far out in front and find that we were ending up with costs that were beyond what we could really afford.
Monica Trauzzi: All right, we'll end it there. Thank you very much for coming on the show.
Greg White: Thank you so much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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