Michigan Commits to an Energy-Efficient Electric Future

October 7, 2008

Washington, D.C. — Yesterday Michigan Governor Jennifer Granholm signed legislation passed last month by the Michigan legislature that sets mandatory energy savings goals for the state's electric and gas utilities. "This legislation represents a significant achievement for Michigan, which has had no utility energy efficiency resource programs since 1995," said ACEEE Utilities Program Director, Dr. Martin Kushler. A 2007 ACEEE study (http://www.aceee.org/research-report/e07x) coauthored by Dr. Kushler found that energy efficiency can actually reduce overall electricity costs, boost net employment, and reduce air pollutants within the state. The report found that greater energy productivity would result in a net annual employment increase of between 3,900 and 10,000 jobs (depending on the level of energy efficiency policy pursued).

The bill (SB213) contains an energy efficiency resource standard (EERS) that requires utilities to meet specific energy savings goals. The goals start at 0.3% of electricity sales in 2009 and ramp up to an annual electricity savings requirement of 1% of total sales by 2012, and continue at that level each year thereafter (0.75% for natural gas utilities). Michigan joins seventeen other states that have EERSs according to an ACEEE fact sheet (http://www.aceee.org/sector/national-policynational/eers0908.htm).

Dr. Kushler, who resides in Michigan, was extensively involved in developing this new state policy. He noted: "This is a big step forward for Michigan, and personally, I'm pleased that my home state will no longer be known as the 'no-program control group' for energy program evaluations in other states."

The energy efficiency components of this legislation were patterned after the analyses conducted as part of the "Michigan 21st Century Electric Energy Plan," which was released by the Michigan Public Service Commission in 2007 (http://www.dleg.state.mi.us/mpsc/electric/capacity/energyplan/index.htm).  That plan concluded that energy efficiency of this magnitude would save Michigan ratepayers over $3 billion, and would avoid the need for two additional major base-load power plants.

This new Michigan legislation also authorizes "shareholder incentives" for utilities that exceed the energy savings requirements, and contains a provision allowing for "decoupling" for natural gas utilities that provide energy efficiency programs. The legislative package also includes a renewable portfolio standard (RPS), which ramps up to 10% of total sales by 2015.

Electronic copies of the legislation are available at the Michigan legislative Web site: http://www.legislature.mi.gov (enter bill number '213').

The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security,  and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 529 14th Street N.W., Suite 600, Washington, D.C. 20045 or visit aceee.org.