Looking for breakthrough energy policies? Much of the action is in the states, former governor tells region's legislators
For policymakers interested in getting innovative energy bills signed into law, the nation’s capital is the last place to be, a former U.S. governor told the Midwest’s legislators in July. Instead, he said, go to Springfield, Lansing or the many other state capitals where policy breakthroughs have occurred.
“We haven’t had comprehensive federal legislation since 2007, so what do we do? We turn to the states,” said Bill Ritter, currently the director of Colorado State University’s Center for the New Energy Economy.
At any given time, Ritter noted during a session of the Midwestern Legislative Conference Annual Meeting, his center is tracking up to 4,500 state-level energy bills. Legislatures not only are brimming with new ideas, he added, but they remain a place where compromises can be forged — across party lines and among competing stakeholder groups.
“There may be partisanship at the state level, but it is oftentimes not intractable,” Ritter said. “It’s not the kind of partisanship where conversations break down.”
Michigan and Illinois provide two cases in point. Lawmakers there successfully built support for measures (SB 437 and 438 in Michigan, and SB 2814 in Illinois) that are now viewed as cornerstones of the two states’ energy futures.
The two-bill legislative package in Michigan passed with large majorities in the House and Senate, tackling tricky policies related to electric choice, distributed generation and renewable power. As a result of that 2016 law, each of Michigan’s electric utilities must have a plan (subject to approval by the Public Service Commission) that forecasts its coverage area’s long-term demands for electricity and that details how these needs will be met.
These integrated resource plans also must show how the utility will reach the Michigan Legislature’s new clean energy goal: to meet at least 35 percent of the state’s electricity needs through a combination of energy efficiency and renewable energy. Lawmakers included new financial incentives and cost-recovery mechanisms to help utilities meet these objectives. For example, savings from energy efficiency are shared by Michigan ratepayers and utilities, and the better the performance of the utility (in terms of energy savings), the greater the level of the state incentive.
Illinois’ SB 2814 needed support from the Democrat-controlled General Assembly and Republican Gov. Bruce Rauner. As part of the final measure, signed into law in late 2016, lawmakers included money (via a customer rate hike) to keep existing nuclear power plants from closing. That provision got the most public attention at the time of the bill’s enactment, but other parts of SB 2814 have been getting more attention as of late.
In particular, the Future Energy Jobs Act has been credited for a recent spike in Illinois’ homegrown renewable energy projects. This is due to a reworking of the state’s renewable energy standard (25 percent by 2025 for investor-owned utilities) that provides more funding and incentives for projects of all sizes — as large as utility-scale wind systems, as small as on-site and community solar development.
Ritter was part of that kind of sea change himself. As governor of Colorado, he made the transition to a “new energy economy” a top policy priority of his administration, including adoption of a renewable portfolio standard of 30 percent. He jokes that only a decade ago, the amount of installed wind capacity in Colorado wasn’t enough to power a “decent-sized ranch.” Today, this renewable source accounts for more than 17 percent of the state’s electricity generation.
“This is happening around the United States, in so many different places,” he said, including those without mandates such as renewable portfolio standards.
“Policy is not everything,” Ritter told lawmakers, but it can be “the driver that allows markets to take over.”
When he first became governor, Ritter said, the cost of wind and solar was about 9.5 cents and 23 cents per kilowatt-hour, respectively. Today, they have fallen to 2 cents per kilowatt-hour for wind and 3.6 cents for solar, including storage.
“Those are incredible numbers that no one would have believed only a few years ago,” Ritter said, noting that utilities are competing with each other to own the most wind power and are now setting internal goals for renewable energy that surpass state mandates.
These new market realities, Ritter said, should be considered by legislators as they mull new energy policies for their states.
|Stateline Midwest: August 2018||2.62 MB|