Environmental Law

Michigan Energy Bill to Encourage Renewables

The energy package which entered Michigan’s Senate on May 1st could end up changing building codes and creating incentives for consumers to pursue renewable energy. For all intensive purposes, the bill will bring Michigan law up to standards found in most other states.

Among the proposed changes is an addition of “net metering.” Net metering allows consumers who create their own renewable energy to run back utility meters when their energy production exceeds their personal demand. Forty-two states have already enacted legislation to this effect. Utility companies do not favor net metering since it results in them purchasing energy back at the retail rate for all energy sent back into the grid.

Of course increased costs that utility companies have to bear will ultimately be passed along to consumers. Some have expressed concern that rates will increase across the board if utilities are forced to buy back this privately generated energy. The positives include less dependence on fossil fuels and a generally more environmentally friendly, sustainable approach.

The United States lags behind Europe in enacting laws such as the one proposed in the Michigan Senate. Europe requires utility companies to buy back green energy from those who feed their surplus into the system. The net result so far has been a few dollars added to consumers’ bills. Some do not appear opposed to the increased cost citing a “feel good,” “I’m helping the environment” mentality.

There is also a chance that similar legislation could be enacted at the national level in the United States. This may be a sensible approach since electricity often flows across state lines and throughout entire regions. The main question is how much renewable energy use do legislators want to encourage. Requiring utilities to buy back energy at a higher than market rate would create an incentive for green energy entrepreneurs to pursue their own wind and solar power generation for profit. Europe mandates that green energy be purchased at seven times the market rate. Are Americans ready to shoulder this cost in the interest of a more sustainable economy? I surmise its best to start with buying back at the market rate and work toward the high environmental bar that Europe has set.

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