Jackson-based Consumers Energy says it hears loud and clear the message from a growing number of large Michigan businesses that want their electricity to come from renewable sources.
Large corporations around the world have been coming together in recent years to demand their operations be powered by renewable sources like wind and solar. It can be a way to meet sustainability goals within the company, but access to renewables — which continue to decrease in cost — also can lock in stable long-term power purchase agreements that don’t come with the price volatility of other sources, such as natural gas.
On May 12, Consumers filed with the Michigan Public Service Commission a “Voluntary Large Customer Renewable Energy Pilot Program” in response to growing demand from its large corporate customers. The program is available to customers with a load of at least 1 megawatt and also allows for the “additionality” of renewable projects — not simply buying renewable energy credits from existing projects.
In announcing the program, Consumers was joined by an official with Switch Ltd., whose data center near Grand Rapids wants to source power entirely from new wind projects. The request from Switch served as a catalyst for Consumers’ proposal, the company said.
Switch worked closely with the utility to develop the proposal, officials said during a May 15 conference call with reporters. The Switch facility is expected to be powered by an expanded Consumers wind project in the Thumb region.
“We’re committed to exceptional customer experience, and part of that is listening to customers and their needs,” said Garrick Rochow, Consumers’ senior vice president for distribution and customer operations.
Using the Corporate Renewable Energy Buyers’ Principles as a framework, Consumers Energy surveyed customers last year based on their interest in renewable energy. More than half of the large business customers that responded expressed an interest in various measures that improve renewable energy access, the utility said in filings with state regulators.
“We’re listening carefully,” Rochow said, adding that the utility also sees the move as an economic development tool. “For companies that are growing and taking a position around clean energy, we want them to come to Michigan.”
MiBiz reported in February 2016 that, in addition to key tax incentives for the company, Switch’s data center also needed to be entirely powered by renewable energy for it to locate to Michigan.
“For us, we didn’t know exactly how to do it, but we committed,” Rochow said.
Adam Kramer, Switch’s executive vice president of strategy, said adding new renewable generation was a key component of the tariff.
“Our relationship with Consumers serves as a model for how utilities can work with companies going forward,” Kramer said.
BUSINESS GROUPS RECEPTIVE
So far, business groups appear receptive to Consumers’ plan, which is still subject to MPSC approval, a process that’s expected to take about six months. In its filing with the MPSC, the utility says the program will not adversely affect the rates of its other customers.
Rochow said Consumers has heard interest in the program from 20 to 30 large-scale companies.
Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE), said in email after reviewing the proposal: “Finally! Finally the utility has listened to customers and provided an option with flexibility for large customers to purchase renewable energy. The proposed tariff meets the needs expressed by customers for a longer term structure which allows for the customer to take advantage of the known fixed pricing available from renewable energy supplies.”
The Michigan Energy Innovation Business Council also supported the plan, saying it represents a shift in thinking among large utilities to be more responsive to customers and receptive of renewable energy.
Going forward, Williamson said ABATE will follow how the cost of service is allocated among different customer classes to ensure that it does not increase costs among ratepayers.
“Based on the limited information in the filing, it appears that should be the case,” Williamson added. “We expect this will be verified by the public service commission as part of any approval of the tariff. This has been filed as a three-year pilot program so it will be interesting to see how many large customers will now utilize what they have been asking for.”
Rochow said the tariff is designed to allow a variety of different businesses to participate in a way that meets their specific needs, whether it’s 100 percent renewable energy or just a portion of it.
While more details will be sorted out during the MPSC process, the idea is that businesses that participate in the program subscribe for additional renewable energy generation. To the extent a new renewable project is not being paid for by specific companies, the utility will use the rest of the generation to go toward meeting the state’s new 15-percent renewable energy mandate by 2021, Rochow said.
Amid the backdrop of increasing business demand, though, is the economic reality of renewable energy.
“Remember, the cost of renewable energy continues to decline in Michigan,” Rochow said. “We’re seeing better wind patterns than anticipated — this is truly a good source of energy supply for the future.”
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