Michigan Clean Energy Year in Review (and the Road Ahead)

Part of NRDC's Year-End Series Reviewing 2020 Climate & Clean Energy Developments

Looking back at the progress that has been made on clean energy in Michigan over this last year, framed against the tumult of 2020, is not an easy task. The human toll of COVID-19, the economic consequences and public health impacts—visited all too frequently and disproportionately upon people of color in Michigan and elsewhere in the U.S.—dominate. This year has been a stark reminder of how easily the world can be turned upside down in just a few short weeks, whether via pandemic, or the here-and-now impacts of climate change, or both.

But 2020 has not only been marked by struggle—we have also seen bright spots of progress on the climate and clean energy front.

Michigan has the chance to turn the existential threat of climate change into opportunity. Clean energy is a solution to both the climate crisis, and to Michigan’s economic recovery from COVID. Further, if applied equitably and inclusively, clean energy solutions could chip away at long-standing systemic inequities that have left Michigan’s residents of color vulnerable to the cumulative impacts of pollution, climate change, and health, economic, and racial inequities.

The stakes are high. With many people out of work and the energy burden higher than ever before, moving decisively and rapidly toward clean energy solutions that work for all people is critical to the health and pocketbooks of Michigan's residents and to the state economy. We are also now well into the most critical decade for climate action (see the Intergovernmental Panel on Climate Change’s (IPCC) 2018 Special Report on Global Warming). Michiganders know this all too well. The impacts of climate change are already here; of note, historically high water levels in Lake Michigan that have begun to encroach on homes, and torrential rainfall this past spring in Midland that caused a crisis of extreme flooding and a breach of two dams, displacing the community during the already devastating pandemic.

But we have an opportunity to mitigate these impacts. We are building a foundation now in Michigan for the clean energy transition, not only reaping the health and economic benefits for residents but also ensuring that the state is doing its part to tackle the climate crisis.

Thankfully, in 2020, we saw action at Michigan’s executive and regulatory levels that bodes well for the future we envision:

  1. A nation-leading executive commitment to ambitiously reduce climate change-fueling pollution;
  2. A shift toward a clean energy path (at least in the short term) for a very gassy utility;
  3. Progress on some of the strongest energy efficiency commitments in the country; and
  4. Initial pushback from regulators on a trend of rate hikes, which if fully approved would have been particularly harmful in the time of COVID.
State Capitol, Lansing, Michigan

Flickr

Clean Energy and Climate Progress in 2020

Whitmer Executive Action on Climate

In 2019, in response to the Trump Administration removing the United States from the Paris Climate Agreement, Governor Gretchen Whitmer joined her fellow Midwest governors in committing Michigan to the Paris pollution reduction goals. But she didn’t stop there. In 2020, Gov. Whitmer doubled down on that commitment with a pair of executive actions setting Michigan on a course for climate action. Executive Directive 2020-10 commits Michigan to:

  • Decarbonize its entire economy (i.e. carbon-neutrality); that includes not just electric power production, but cars and trucks, the home appliances that heat and cool your home, as well as heavy industry, agriculture, and other key economic sectors, by 2050.
  • Requires all Michigan investor-owned utilities' long-term energy plans—known as Integrated Resource Plans or “IRPs”—to be in lockstep with the Directive’s climate goals, including environmental justice and health impact considerations, progress which impacted communities have long championed
  • Directs the Department of Environment, Great Lakes, and Energy's (EGLE) Office on Climate and Energy to develop and implement the MI Healthy Climate Plan—Michigan's blueprint for transitioning to a clean energy economy and carbon-neutrality.

Additionally, Gov. Whitmer issued Executive Order 2020-182, which created the Council on Climate Solutions. The Council is charged with guiding EGLE's development and implementation of the MI Healthy Climate Plan, which will set a 5-year course for meeting the goals of the executive action.

While the goals outlined in the Governor's executive actions are ambitious, they are necessary to ensure a livable climate. They are based in science and are incredibly attainable. Of note, Princeton University recently released a new report outlining several pathways to achieve carbon neutrality by 2050. The findings are remarkably consistent with other recent decarbonization studies. Carbon neutrality can be affordably achieved by ramping up solutions that are available today—renewable energy like wind and solar, using power more smartly through energy efficiency, and quite literally plugging our cars and buildings into an increasingly clean electric power grid. It will mean fundamentally transforming Michigan’s landscape over the next few decades as we move to an increasingly clean economy. The key is to get started now.

In addition to the greenhouse gas emissions reduction benefits of the transition contemplated in the executive action, electrification of our buildings and transportation can create substantial health benefits, including both indoor and outdoor air quality. Replacing fossil-fueled appliances like gas stoves can reduce indoor air pollutants, including the fine particulate matter known to exacerbate the respiratory impacts of COVID-19. As for transportation, replacing diesel trucks and gas-fueled cars with electric versions eliminates harmful smog forming pollutants.

As the MI Healthy Climate Plan is being developed, it will be critical to build in a process and policy framework to ensure this transition happens fairly and equitably. We must ensure that the state commits to cutting GHGs in a way that prioritizes the health and wellbeing of Black, Brown, and Indigenous communities, which are weathering the cumulative impacts of pollution and climate disruptions. Environmental justice communities are disproportionately exposed to air pollution from the burning of fossil fuels, including the specific type of particulate pollution associated with a higher risk of death from COVID-19. This exacerbates the health risks of the pandemic on people of color, coupled with the cumulative impacts of long-term exposure to pollution. Given these risks, Governor Whitmer and her administration must work with impact community stakeholders and engage them in a meaningful way while developing the action plan.

DTE Resource Planning—A Cleaner Path (For Now…)

IRPs have become an important forum for advocates to ensure that Michigan’s utilities are moving forward as aggressively as possible in transitioning away from fossil fuels and toward clean energy. These plans set out a set out a five-year trajectory for delivering electricity to utility customers. They also include a host of issues, such as the fate of the state’s remaining coal plants, the future development of new electric power sources, energy efficiency, and (increasingly) demand-side clean energy opportunities like EVs and electric appliances (for more on why you should care about IRPs, NRDC’s primer on the subject).

But the path to a cleaner power grid in Michigan has not always been a straight line. For example, despite its commitment to achieve net-zero electric power production by 2050, DTE Energy persists in a long-term trajectory that includes fossil gas plants. In 2018, NRDC and our partners pushed back against DTE’s proposal to build an 1,100 MW gas plant with a $1 billion price tag. We unfortunately lost that battle (the plant was approved and is under construction), but the war against new gas plants continued into the subsequent IRP.

Smokestacks over Detroit, Michigan

Flickr

In 2020, we saw regulators at the Michigan Public Service Commission (MPSC) emphasize the importance of clean energy more than ever before, having an impact (at least in the near-term) on DTE’s path. DTE's initial IRP was both less ambitious and less committed on efficiency and renewable energy than the most-recently approved plan by Consumers Energy (see our colleague’s blogs here and here on the DTE proposal and a comparison with Consumers Energy’s 2019 IRP). Perhaps most troubling, while the utility proposed clean energy investments over the next five years, in the longer-term (2030 and beyond), it proposed multiple paths it could go down—several of which are quite gassy, relying heavily on building new, costly gas plants. Such a direction would be incompatible with both DTE’s climate commitments and the ambition of Governor Whitmer’s executive action, which recognizes the need to move away from fossil fuels as a dominant power source for Michigan.

Thankfully, regulators agreed. In February, MPSC found that DTE’s plan was fundamentally flawed, and they recommended substantial changes. Weeks later, DTE filed a revised plan incorporating many of the regulators’ key recommendations, including a focus on renewable energy (at least in the short term) and a commitment to 2% energy efficiency for the first time in that utility’s history.

The path ahead for DTE’s resource planning is a bit hazy as we exit 2020; while the path for the next five years has been set, DTE appears to be keeping its options on new fossil gas generation open in the 2025-2040 timeframe. Ironically, this is during the very same period when Michigan needs to be moving clearly and decisively toward clean energy.

Nation-Leading Energy Efficiency

Energy efficiency is already an important part of Michigan’s decarbonization strategy; it provides a foundation for cutting harmful emissions from the power sector, as well as opportunities for consumers to reduce their energy bills.

Michigan’s energy efficiency programs are revisited every two years. In 2020, NRDC—along with Michigan Energy Efficiency for All (MEEFA) partners and allies including Ecology Center, EcoWorks, National Housing Trust, Soulardarity, Sierra Club and EarthJustice—set a new course with DTE’s efficiency portfolio. We developed a plan which led to $10 million of funding for low-income single family and multifamily households—the highest level of low-income energy efficiency commitment ever seen for this service territory. The Consumers Energy efficiency portfolio was also finalized in 2020, and we saw similar levels of investment in low-income programming thanks to advocacy from NRDC and MEEFA partners Ecology Center and National Housing Trust. Additionally, both Companies agreed to establish low-income pilot programs focused on adding health and safety measures to energy efficiency retrofits, which will unlock efficiency opportunities for housing previously considered unworkable.

Both companies also agreed to pilot programs targeting energy efficiency to payment-troubled customers, to better align energy assistance offerings, customers in arrears, and those struggling with energy burden, directly with energy efficiency. Finally, both utilities agreed to region-leading building electrification pilots that are targeting high-efficiency heat pump retrofits in affordable multi-family and single-family homes, as well as in new construction.

Rate Cases—Regulators Hold the Line on Non-Strategic Spending and Accelerate Clean Energy Transition

NRDC and our partners litigated another round of DTE and Consumers Energy rate cases in 2020, the fifth round of cases for each utility in as many years. The central driver for this seemingly ceaseless cycle of rate hikes is the utilities’ focus on distribution system spending to mitigate ongoing reliability issues, which have been plaguing Michigan for years and have earned the state the dubious distinction of leading the country in power outages. The goal of electric power reliability is an important one, particularly during COVID when so many people are sheltering in place. But, to date, neither utility has demonstrated that the consumer dollars they're investing in the grid are proving successful at overcoming these reliability challenges. This year, the MPSC partially agreed with this assessment in the DTE rate case, concluding that the full proposed increase was not justified. In coming to this conclusion, the specifically cut significant portions of the utilities’ proposed distribution system spending. The MPSC also reaffirmed the economic albatross that is the utility’s remaining coal plants; regulators axed millions of dollars in imprudent investments in the River Rouge coal plant that would have extended the plant’s life by burning industrial gases. They also required DTE to evaluate the economics of the Belle River coal plant (slated for 2029 retirement) against cheaper renewable resources and to consider earlier retirement of that plant.

The Consumers Energy case was just decided in recent days, and we are still evaluating its impacts. At a high level, MPSC shaved down the requested rate hike by more than ½, though (troublingly) residents will still see a rate increase while in the throes of a pandemic and economic upheaval. A small silver lining of the case was an expansion of the utility’s very successful public vehicle charging infrastructure pilot, which will add municipal and fleet elements to the existing program. NRDC and our partners supported this expansion given the critical foundational role charging stations will have in supporting the transition to electric vehicles in Michigan. The Commission concurred.

A Preview of What’s to Come in 2021

In 2021, the stakes will continue to rise on advancing equitable clean energy solutions to the climate crisis in Michigan. The Governor’s Council on Climate Solutions will be announced, and it will begin work on an action plan to implement the executive action. We’ll have another shot at an IRP, two rate cases, and another round of energy efficiency portfolio dockets. Here’s a preview of what’s the come:

COVID, Access to Essential Services, and Affordability

While Governor Whitmer declined to issue a statewide moratorium on electric and gas disconnections at the onset of the pandemic, the MPSC opened a docket in which DTE and Consumers Energy are required to file data documenting customer disconnections and reconnections. The short-term benefits of the regulatory action were considerable; thousands of households previously disconnected have now had service restored at a time of crisis when customers may already be under considerable stress. However, as the pandemic wears on, there are growing concerns that the customer protections originally put in place have fallen away and disconnections continue. We are working with our partners in the Michigan Energy Efficiency for All coalition and other advocates to push the MPSC for a series of both emergency and longer-term measures to seize this moment of crisis and shape the future by ensuring access to affordable utility service for all Michigan residents in the long-term.

See MEEFA’s request filed in November in the COVID docket here.

Making Good on Consumers Energy’s Climate Commitments

Consumers Energy has committed to net-zero carbon emissions by 2040 from their electric power grid. The utility’s next IRP is due to be filed in June 2021, which will be an important opportunity to be even bolder and accelerate the clean energy transition in their service territory. NRDC and our partners are asking the utility to follow through on its commitment in their last IRP by doing the following: moving up planned coal plant retirements; confirming the utility’s commitment to refrain from building or acquiring any new gas plants; and doubling down on even more wind, solar, battery storage, and energy efficiency (see here for a deeper dive on the path we are asking Consumers to walk).

Community Solar Gardens at Grand Valley State University (Consumers Energy)

Flickr

Energy Efficiency Portfolios—The Foundation of Climate Action

In 2021, we’ll be back at it again with new energy efficiency portfolios in the Consumers Energy and DTE Energy territories, working to secure even more ambitious programs to move Michigan farther down the path to meet critical climate targets, and to ensure low-income and communities of color are receiving an equitable distribution of energy efficiency programs and benefits. We challenge the utilities to focus even more on low-income energy efficiency and bill affordability programs—especially during COVID-19, when the energy burden has never been higher.

Yet Another Round of Rate Cases, But the First in the COVID Era

Consumers Energy and DTE will be filing yet another round of rate increase requests in the Spring and Summer of 2021, respectively. While this will be the sixth set of these filings in as many years, there will be one key difference for 2021: they will be the first filed in the midst of a pandemic. Unfortunately, our concerns about energy burden and affordability are even more acute as we head into the 2021 round of cases. These new rate hike requests will test the boundaries of the regulatory framework at a time of unprecedented consumer hardship.

In addition to these very serious affordability concerns, there is an ongoing question of how to break out of the cycle of rate increases, which have been driven by distribution system spending that has yet to solve underlying reliability problems. Thankfully, the MPSC is requiring Consumers Energy’s IRP to link clean energy resource planning on the generation side, with distribution and behind-the meter planning on the customer side. But the devil is in the details for how to do that well, and the jury is out on how committed DTE and Consumers Energy are to taking on that challenging and important process.

But the other vital need is for utilities to commit to an iterative distribution system planning process that will address both reliability needs and ensure we are prepared for an increasingly dynamic, flexible, and clean power grid. Acting on the Governor’s goal of reaching carbon-neutrality will mean cleaning up the grid and then literally plugging our other oil and gas fueled technologies into that clean grid. This will mean a ton of new behind-the-meter technology and electric appliances (e.g. rooftop solar, battery storage, EVs, electric heat pumps for space heating and cooling, and water heating) that can be leveraged to provide flexibility when the time comes—such as, when the sun goes down and solar panels stop producing power. Distribution system planning is the key to unlocking this grid flexibility, using it to support high levels of wind and solar, all while ensuring reliability (for more on the distribution system planning, see NRDC’s blog here, as well as our colleagues at Michigan Citizens Utility Board.). To date, Michigan’s regulators have yet to fully require the depth of planning that will be necessary to realize this vision.

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We are now poised at the beginning of the most important decade to act on climate. It will be a win-win for this beautiful state if we do it right—cleaner air and healthier people, more prosperity, more equity, more economic opportunity. The clean energy solutions that are key to unlocking these benefits are well-known, cost-competitive, and available right now.

2020 helped set the stage for the clean energy transition, and now we need to muster the courage and take the next steps to make this transition a reality for Michigan.

About the Authors

Samantha Williams

Director, Midwest Region, Climate & Clean Energy Program

Derrell E. Slaughter

Michigan Clean Energy Advocate, Climate & Clean Energy Program

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