"Michigan is going to control its own energy future."
That's Michigan Agency for Energy Executive Director Valerie Brader, describing the benefits of the state's new energy law, which goes into effect tomorrow.
The law removes the cap on how much utilities can use energy efficiency and renewable energy to meet the state's energy needs, says Brader.
She says energy efficiency projects have already saved the state $4 billion since 2008, and there's the potential for even more, especially if energy efficiency is the cheapest way to meet demand for power.
"We're either going to use less energy or we're going to buy more coal and more gas from other states to fuel our power stations," says Brader.
The new law also removes a prohibition against on-bill financing, a method for residential customers to pay for energy efficiency improvements in their home over time, rather than paying the whole cost up front.
"Let's say you put new insulation in your house," Brader says. "There's an upfront cost to that, but you'd have lower energy bills right away. Well, if you could pay the cost over time while you're paying your energy bill, you could end up with the overall the same bill for a while, and then lower bills later."
The details of how on-bill financing will work statewide have yet to be finalized, says Brader. But Holland's city-run utility is preparing to offer the financing option first, and that could become one of the models for Consumers Energy and DTE Energy, should they decide to offer the option.
The law also gives customers the option of demanding more renewable energy, even if it's not the cheapest option. That means companies like General Motors, which plans to use 100% renewable energy by 2050 for all its operations, can opt to pay more for it -- and utilities will have to provide it.
Brader says that's an example of the flexibility of the law.
Another example of the law's flexibility, she says, is utilities will no longer be locked into projects that turn out to be more costly than anticipated. Either the utilities or the Michigan Public Service Commission can pull the plug on projects that are not offering the benefits they promised.
She says that will avoid situations that have happened in other states -- where utilities have had to continue construction of new coal or nuclear power plants despite staggering cost overruns, when solar and wind costs are plummeting.