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Some small renewable energy producers happy, others not, with new rates from MPSC

Nov 23, 2017

The Michigan Public Service Commission has set new "avoided cost" rates for small, renewable energy companies that provide electricity to Consumers Energy.

The rates compensate the producers for the electricity they provide, which allows Consumers Energy to "avoid" having to produce that amount of energy itself.

The new rates are seen as deeply unfair by some types of renewable energy producers, like hydro and waste-to-energy.

Darwin Baas is director of Kent County Public Works, which sells some of the electricity it produces from a landfill gas-to energy facility to Consumers.

He says it appears that the new rates reflect a 25% cut or greater. That amounts to about $2 million less a year for Kent County.

"It will literally put many of us out of business, or cause us -- the very few of us who have more than one revenue source -- to have to raise our rates," says Baas.

Baas says Kent County and other producers that have existing contracts with Consumers Energy plan to appeal the rates to the Court of Appeals, to try to keep the rates from going into effect.

The new rates are good news for solar, however, according to Margrethe Kearney of the Environmental Law and Policy Center. She says the new rates reflect the fact that solar energy is produced when it's needed most -- at times of peak demand. So the rate is higher for small solar companies. 

For consumers, that could mean "there will be more solar energy provided in Michigan," says Kearney.  "Solar will be a bigger part of the energy that I consume, but it's not going to come at any increased cost to me."

The Michigan Public Service Commission is expected to issue avoided cost rates for DTE soon.