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FromGoaltoLaw:Institutionalizing
Michigan’sElectricityDecarbonization
IssueBrief24-07byMayaDomeshek—July2024
1.Introduction
InNovemberof2023,thegovernorofMichigansignedapackageofclimatebills(ExecutiveOfficeofthe
Governor2023)thatsetsa100percentcleanelectricitytargetfor2040,oneoftheearliestintheUnitedStates(CESAn.d.).In2020,thegovernorissuedanexecutive
ordersettingagoalforthestatetoreachnetzero
carbonemissionsby2050(ExecutiveDirective2020-102019);in2022,theMIHealthyClimatePlanwasreleased,outliningactionsthestatecouldtakeby2030towork
towardthatgoal(EGLE2022).Thestate’slargest
investor-ownedutilitieshadpreviouslysetvoluntary
decarbonizationtargets:DTEfor2050(DTEEnergy
2019)andConsumersEnergyfor2040(Consumers
Energy2020).Fall2023’slegislativepackageincludedsixpiecesoflegislation:SB271oncleanelectricity,HB5120onrenewablespermitting,SB277onsitingsolaronfarmland,SB273onefficientelectrification,SB519onhelpingworkerstransitionoutofthefossilsector,
andSB502ontheutilityintegratedresourceplanning(IRP)process.Thisbriefcomparestheprovisionsofthelegislationwiththestate’sexistingplanandutilityplanstoevaluatetheprogressthestatehasmadetoward
institutionalizingelectricitydecarbonization.
2.Background
Michiganisthesecond-highestelectricity-producing
stateintheMid-ContinentIndependentSystem
Operator(MISO)territory(afterILandexcludingTX)
(EIA2024).Itproducesaboutasmuchelectricityas
itconsumes(Figure1a),andin2022,itproduced29
percentwithcoal,22percentwithnuclear,35percentwithgas,andmostoftheremainderwithrenewables.Themajorityofitscapacityisgas(44percent)and
coal(21percent),butitalsohassubstantialnuclear,
pumpedstorage,andwind(Figure1b).Formorethan
adecade,thestate’selectricityemissionshavebeen
trendingdownward(Figure1c),largelythroughcoaltogasswitching.MichiganhashadaRenewablePortfolioStandard(RPS)since2008,originallytoppingoutat
10percentin2015.Aftera2012ballotinitiativefailed
toraisethegoalto25percentby2025(Ferber2012),thelegislatureraiseditto15percentby2021(Walton
2016).Giventhatsomeout-of-staterenewablesare
eligibleforcredittowardRPS,compliancewiththe15
percenttargetwasachievedwithin-staterenewablesonlygenerating11percentoftotalsales(Figure1a).Themajority(74percent)ofsalesinthestatearebyitstwolargestinvestor-ownedutilities,ConsumersEnergyandDTE(Figure1d).
Figure1.OverviewofMichigan’sElectricitySectorFigure1a.Generation(2022)
Figure1c.CO2Emissions
Figure1b.Capacity(2022)
Figure1d.ElectricitySales(2022)
Datasource:MichiganElectricityProfile2022(EIA2023).
ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization2
3.CleanGeneration
Theheadlineprovisionsofthelegislativepackage
aretheRPSandcleanenergystandard(CES).TheMIHealthyClimatePlancalledforreaching60percent
renewablesin2030(EGLE2022).TheNovember
legislativepackagecontainsamodifiedversionofthisplan:50percentRPSby2030,100percentcleanby
2040(SB2712023,§28(1)and§51(1)).Itincludesgas
withcarboncaptureandstorage(CCS)asaneligible
cleantechnology(SB2712023,§3(i)(ii))—likelybecauseDTEmodeledthatasits950MWoffirmpowerin2035aspartofits2022IRP(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.17,p.8).
ThelawalsoincludeshalfcreditforMichigan’slast
incineratoruntil2040,whenitmustretire(SB2712023§39(c));itisinGrandRapids(Buza2023).Allelectricityproviders(regulatedutilities,municipalutilities,rural
cooperatives,andindependentsuppliers)aresubjecttothecleanandrenewableenergyrequirements(SB2712023,§5(d)),Andeligiblefacilitiesmustbein-stateoreligibletomeetMISO“resourceadequacyobligations”(SB2712023,§29(1)).
Thelegislativepackagealsocodifiesstorage
deploymentgoalsandenablesfurtherdistributed
generation.TheMIHealthyClimatePlancalledfor
2,500MWofadditionalstorageby2030(EGLE2022),theexactrequirementultimatelyincludedinthe
law(SB2712023,§101).Thistargetissubstantially
higherthanthatproposedinutilityplans.DTEagreedto780MWofstorageby2030initssettlement
agreement(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section13).
ConsumersEnergyplannedfornoadditionalstorage
until2032initsIRP(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.243)
butagreedtoabatterydeploymentprograminits
settlementagreement(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,
section3).TheMIHealthyClimatePlancalledforan
increaseindistributedrenewablegenerationbutdidnotrecommendamechanismtoachieveit(EGLE2022).
Atthetime,Michiganlawdidnotrequireutilitiesto
allowdistributedgenerationofmorethan1percentoftheiraveragepeakload,arulereferredtoasa“cap”
ondistributedgeneration(Buza2023).Butthestate
begannegotiatingwithutilitiestoincreasetheamountofdistributedgenerationintheIRPprocess,getting
DTEtoagreeto6percentinthe2022settlement
agreement(InthematteroftheapplicationofDTE
ELECTRICCOMPANY2022,ItemNo.527,section15).TheNovemberlegislativepackageuniformlyincreasedthecapondistributedgenerationto10percent(SB2712023,§173).
4.FossilGeneration
TheMIHealthyClimatePlancalledforretiringall
coalunitsby2030andphasingdowngasgeneration(EGLE2022),butthelegislativepackagecontainednoconstraintsonfossilgeneration.IntheirlastIRP,DTEandthestateagreedthatitwouldretireallremainingcoalby2032(BelleRivercoalconvertedtogasin2024;
Monroe1&2and3&4retiredbytheendof2028and
in2032,respectively)(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,sections2and3).Althoughtheutilitydoesnotplantoreduce
gasgenerationbeforethelate2030s(Inthematterof
theapplicationofDTEELECTRICCOMPANY2022,ItemNo.17,p.5),itdoesplantoretireoneofitsgaspeakers(StClair)in2024(Inthematteroftheapplicationof
DTEELECTRICCOMPANY2022,ItemNo.527,section17).Thestateandutilityagreedtosecuritize1.045billionofthecostsoftheBelleRiverconversionandMonroe
closuresandtreattheremainderasaregulatoryasset(InthematteroftheapplicationofDTEELECTRIC
COMPANY2022,ItemNo.527,section4),whichmeansthatanyremainingdebtontheplantsstaysintheratebase.DTEalsoenvisionsanewgasCCSplantin2035(InthematteroftheapplicationofDTEELECTRIC
COMPANY2022,ItemNo.17,p.8).
ConsumersEnergyplannedtoretireallcoalby2025(Karn1&2in2023;Campbell1,2,&3in2025)(In
thematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.7).Tomakeupforthelostcapacity,itplanstobuyagasplantownedby
ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization3
anindependentpowerproducer1andwillretiretwo
additionalgasandoilunitsin2031(Karn3&4)ifnot
neededassystemsupportresources(InthematteroftheapplicationofConsumersEnergyCompany2021,Item
No.901,sections2and4).LikeDTE,ConsumersEnergyreceivedpermissiontorecoverthecostsofCampbell
anditscoalashandcleanupasaregulatoryasset(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section5).
Theseplans,ifcarriedout,shouldleaveMichiganwithessentiallyzerocoalcapacityafter20322butfallshortoftheMIHealthyClimatePlan’srecommendationtoretireallcoalby2030andreducegas.
5.SitingandPermitting
Thelegislativepackagecreatesauniformpermitting
systemforrenewableenergythroughoutthestateandeasesthewaytositingsolaronagriculturalland.The
MIHealthyClimatePlanonlysuggestedthatthestate“supportlocal…governmenttoadoptbestpracticesforsitingrenewableenergysystems”(EGLE2022,p.35).
ThelegislationgoesmuchfurtherandcreatesauniformrenewablepermittingsystemthroughtheMichigan
PublicServiceCommission(MPSC).Itsetsuniform
healthandsafetystandards,includingsetbacksand
limitsonnoise,light,andshadowflickerforpropertiesthathaveenteredintoagreementswithdevelopers
(‘participatingproperties’)andthosethathavenot
(‘nonparticipatingproperties’)(HB51202023,§226(8)).
Forlocalitiesthathavesitingordinancescompatible
withthestate-levelone,developersmustapply
throughthelocality(HB51202023,§223(3)).Ifthe
localgovernmentdeniestheprojecteventhoughit
complieswiththestatewiderule,thenthedevelopercanapplyforapermitthroughtheMPSC(HB51202023,
§223(3)(c)and§223(5)).Thelawoutlineswhatsuch
anapplicationtotheMPSCshouldlooklike—includingproofofcommunityoutreachandajustificationforthe
choiceofsiteifitisagreenfieldinsteadofabrownfield(HB51202023,§225).Thelawincludescriteriafor
approval,includingcompliancewiththehealthandsafetystandards(HB51202023,§226(8)),laborstandards
(HB51202023,§226(7)(e)),noticeandcommentfor
thelocality(HB51202023,§226(2)),ahostcommunityagreementorcommunitybenefitsagreement(HB51202023,§227),and“consider[ing]andaddress[ing]”harmtotheenvironment(HB51202023,§226(7)(c)).
Asecondpieceoflegislationeasesthewaytositingsolaronfarmlandbyallowingitonfarmlandthathasenteredintoa“developmentrightsagreement”withthestate,
whichisatypeofagreementwhereinthelandownerandthestateagreetomaintainthelandundevelopedforaperiodofyears)(SB2772023).
6.Electrification
Thelegislativepackagemakesstridestowardbuildingelectrificationbutdoesnotsetfirmtargetsinthe
buildingandtransportsectors.TheMIHealthyClimatePlancallsforbuildingoutcharginginfrastructurefor
2millionelectricvehicles(EVs),addingEVsubsidies,
reducinggreenhousegasemissionsinthebuilding
sectorby17percentby2030(withoutidentifyingthebaseyear),andincreasingthetargetsofthestate’s
EnergyWasteReduction(EWR)program(EGLE2022).ThelegislationdoesnotaddressEVs,butitexpandsontheEWRprogramtoencouragebuildingelectrification.
Michigan’sEWRprogramissimilartoenergyefficiency
programsinotherstates,andpriortothepassageofthenewlawrequiredelectricutilitiestoreduceelectricity
salesby1%eachyearrelativetotheprioryear’ssalesandgascompaniestoreducegassalesby.75%eachyear.3
Thenewlawencouragesbuildingelectrificationby
defining“efficientelectrification”asatypeofEWR(SB
2732023,§71and§72(1)).Ifanelectricorgasutilityhelpsacustomerreplaceagasfurnacewithanelectricheat
pump,theutilitygetscreditforthedifferencebetween
1Itproposedbuyingfoursuchplants(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.10),butthestatenegotiateditdowntoone(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section2).
2MichiganwouldstillhavetheMSCSebewaingcoalplant(1.5MW)andtheMunising(Cogen)coalplant(6.2MW),whichpowersapapermill(GlobalEnergyMonitorn.d.;GridInfon.d.).
3M.C.L460.1077(1)and(3),(2008)(modified2023),nowSB2732023,§77(1)and(8).
ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization4
theenergyconsumptionoftheoldapplianceand
thatofthenewoneeventhoughelectricitydemand
increases(SB2732023,§77(4)).ThelawalsoincreasestheEWRrequirementfrom1percentto1.5percent
forelectricutilities,withagoalof2percent(SB273
2023,§77(2)),andfrom0.75percentto0.875percent
forgasutilities(SB2732023,§77(8)).Utilitiesreceive
compensationbasedontheirperformanceinmeeting
orexceedingthetarget(SB2732023,§75(2)).IfelectricutilitiesmetalltheEWRwithefficientelectrification
measures,demandcouldgrowbymorethan2percentperyear.ThelegislationalsorequirestheMPSCtostudyelectrificationasameansofreducingCO2emissions
(SB5022023,§6t(1)(j))andsothatitcansetdemandgrowthprojectionsthatutilitiesmustconsiderinfutureIRPs(SB5022023,§6t(1)(f)).
7.Affordability
Thelegislationdoesnotdirectlyaddressaffordability,
butitdoesstronglysupportlow-incomeenergy
efficiencyandelectrification.TheMIHealthyClimate
Plancallsfor“develop[ing]andexpand[ing]utility
programstoensurenolow-incomehouseholdis
spendingmorethan6percentoftheirannualincome
onenergy”(EGLE2022,p.36).Thishasbeenan
askofMichigan’senvironmentalandenergyjustice
movementsinceatleasttheDetroit’sPeopleand
EnergyCoalition’scampaignagainstDTEshutoffsin
theearly2010s(Rector2023).Householdswithincomelessthan30percentoftheareamedianincomespend18percentoftheirincomeonenergycomparedto3
percentforthestateaverage(DOEOfficeofStateandCommunityEnergyProgramsn.d.).Likemoststates,
Michiganprovidessomeassistanceforlow-income
electricityconsumersthroughtheLow-IncomeHome
EnergyAssistanceProgram(LIHEAP)(Energyand
Weatherization2024)andoccasionalrequireddonationsfromtheutilities.4Thenewlegislationdoesnotaddressthisconcern.Itdoes,however,offerstrongincentivesforelectrificationinlow-incomehouseholds;inparticular,itrequireselectricutilitiestospendatleast25percentof
EWRmoneyonthem(SB2732023,§80(3)).Itallowsthe
useofsuchmoneyforhealthandsafetyinvestments“thatareimpedimentstoimplementingenergy
wastereductionmeasuresforlow-incomeresidentialcustomers”andprovidesamonetaryincentivefor
doingsothroughperformance-basedcompensationthattreatshealthandsafetyinvestmentsasthough
theysavedthesameamountofenergyperdollaras
theutility’saveragedollarspentonEWR(SB2732023,§80(2)).
8.EnvironmentalJustice
Thenewlegislationcodifiestheconsiderationof
environmentaljustice(EJ)inutilityplansandincreasesopportunitiesforpublicparticipationintheIRPprocess,butitdoesnotforbidincreasesincumulativeimpacts
thewayNewYorkandNewJersey’snewEJlawsdo
(S8830NY2022;S232NJ2020)andevenpartially
creditsalandfillwastefacilityintheRPS,anaction
opposedbyEJorganizations.Sincea2019executive
order(ExecutiveOrder2019-062019),MichiganhashadanofficeoftheEnvironmentalJusticeAdvocatethathasbeenhelpingtodevelopthestate’sEJscreeningtool
(EGLE2022).TheMIHealthyClimatePlandescribes
EJas“astheequitabletreatmentandmeaningful
involvementofallpeople,regardlessofrace,color,
nationalorigin,ability,orincomeinthedevelopmentandapplicationoflaws,regulations,andpoliciesthataffecttheenvironment”(EGLE2022,p.16)andrecommendsastate-levelJustice40initiative,arequirementforEJanalysisinIRPs,andincreasedfundingfortheutility
consumerrepresentationfund(EGLE2022,p.31).
Thelawfollowsthroughonthepublicparticipation
andIRPrecommendationsfromthePlan.Itupsthe
amountofmoneygoingtotheutilityconsumerpublic
participationfundto$2millionanddirectstheboard
toemphasizedistributiontoEJorganizations(SB5022023,§6m).ItalsorequirestheMPSCtoholdfourpublicmeetingsannuallythroughoutthestateandstarta
docketonpublicparticipationandtransparency(SB
4TheConsumersEnergysettlementagreementrequiresthecompanytosetaside$5millionin2022and$2millionayearduringthelifeofthecoalregulatoryassetforlow-incomebillassistance(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.901,section13).TheDTEsettlementagreementrequiresthecompanytopay$30milliontoorganizationsthat
providepaymentassistancetolow-incomeratepayersoverthelifetimeoftheregulatoryassetportionoftheretiredMonroecoalplant(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section20).
ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization5
5022023,§6aa).AlthoughthestatehadalreadybegunrequiringutilityanalysisofEJthroughsettlement
agreements(Inthematteroftheapplicationof
ConsumersEnergyCompany2021,ItemNo.901,section17;InthematteroftheapplicationofDTEELECTRIC
COMPANY2022,ItemNo.527,section23),thelaw
codifiesthispractice.ItrequirestheMPSCtoidentifyEJcommunitiesona4-yearcycle(SB5022023,§6t(1)(k));IRPstoincludeEJanalysisofanyconstruction
ofanewgasplantandthecontinuedoperationor
retirementofpeakerplantsinEJcommunities(SB5022023,§6t(5)(p));theMPSCtogetanadvisoryopinionfromtheDepartmentoftheEnvironment,GreatLakes,andEnergy(EGLE)onwhethertheIRPredressesharmtoEJcommunities(SB5022023,§6t(7)(a)(iii)(F));anditaddsasacriterionforapprovalthattheplanmitigatedisproportionateimpacts(SB5022023,§6t(8)(e)).
9.Conclusion
Michigan’sNovemberpackageofclimatelawstakessubstantialstepstowardthegoalsoutlinedinthe
MIHealthyClimatePlan.TheRPSandCEScodifyamodifiedversionoftheonerecommendedinthePlan.
Thepermittinglawcreatesauniformsystemthroughoutthestatethatwillmakethebuildoutofrenewables
easier,farbeyondthatenvisionedbythePlan.IncludingefficientelectrificationmeasuresintheEWRprogram
willhelpthestateelectrifybuildingsandreducecosts
forlow-incomehouseholdsthatreceiveretrofitsthroughtheprogram.ThereformstotheIRPprocesswill
increasepublicparticipationandconsiderationofEJinawaythatbeginstomeetthePlan’scommitmentstoEJ.
Thelegislationdoesnotmakeanyfirmcommitmentsaboutfossilgenerationandevenenvisionsaroleforit,whencoupledwithCCS,inthefuturecleangrid,butexistingagreementsbetweenthestateandutilities
shouldretirealmostallcoal-firedgeneratorsby2032.Itdoesnotsetfirmelectrificationtargetsordealwithelectrificationoutsideofthebuildingsector.Itdoes
nottakeanystepstowardthegoaloflimitingenergyexpenditurestonomorethan6percentofincome,asoutlinedinthePlan.Thelegislativepackagegoesa
longwaytowardcodifyingandexpandingupontheMIHealthyClimatePlan;futureprogresswilldependonimplementation.
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ResourcesfortheFuture—FromGoaltoLaw:InstitutionalizingMichigan’sElectricityDecarbonization7
Table1.ComparisonofStateClimatePlan,UtilityPlans,and2023CleanEnergyLaws
2022MIHealthClimatePlan
Recommendations(EGLE2022)
UtilityPlans
2023Legislation
Clean
Generation
60%renewable(50%RPS)by2030
DTEtoreach0by2050(DTEEnergy2019);ConsumersEnergytodosoby2040(ConsumersEnergy2024)
Sets50%RPSby2030(SB2712023,§28(1)),
includingwasteincinerationuntil2040(SB271
2023,§39(c));sets100%CESby2040(SB271
2023,§51(1)),includingCCS(SB2712023,§3(i)(ii))
2,500MWstoragetargetby2030
DTEtobuild780MWby2030(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section13)
Requires2,500MWstorageby2030(SB2712023,§101)
Increasingdistributedrenewable
StatenegotiatedwithDTEtoincreasedistributedgenerationcapto6%
Requiresutilitiestoallowdistributedgeneration
generation
(InthematteroftheapplicationofDTEELECTRICCOMPANY2022,ItemNo.527,section15)
upto10%ofaveragepeakload(SB2712023,§173)
Fossil
Generation
Retiringcoalby2030
DTEtoretirecoalby2032(InthematteroftheapplicationofDTE
ELECTRICCOMPANY2022,ItemNo.527,sections2and3);ConsumersEnergytodosoby2025(InthematteroftheapplicationofConsumersEnergyCompany2021,ItemNo.4,p.7)
—
Planninggasphaseout
DTEtoretirecoalby2032(Inthematt
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