LANSING — Proponents of renewable energy in Michigan say Consumers Energy Co’s. “green power” initiative could provide the industry the spark it needs to generate more business in the future.
The Michigan Public Service Commission (MPSC) last week voted unanimously to approve Consumers Energy’s three-year pilot program that would enable up to 18,000 of the utility’s customers, for an additional fee, to receive a set percentage of their electricity from zero-emissions, renewable energy sources such as solar, wind or hydroelectric.
Consumers Energy plans to pass on proceeds generated under the Green Power Pilot Program to renewable-energy producers to invest in their operations. Depending on the number of people who enroll, the program could generate as much as $3 million a year for renewable-energy producers.
The long-term contracts Consumers Energy signs with producers will provide the kind of stability needed to help the industry attract capital investments for further development of green power generators, said Richard VanderVeen of Bay Windpower LLC, a Grand Rapids company that’s been working to develop wind energy projects in Michigan.
“This is a major breakthrough,” VanderVeen said of the Consumers Energy pilot. “It puts the incentives in the right place so the private sector can appropriately respond.”
Bay Windpower’s first project is the development of five wind turbines in Mackinaw City to produce 900 kilowatts of electricity that VanderVeen plans sell to Consumer Energy for customers who enroll in the pilot program. Within hours of the MPSC’s approval of the program, VanderVeen became the first generator to sign a long-term contract to sell his green power to Consumers Energy.
“It’s a very good start and it puts us in a position to now be the first off the mark,” said VanderVeen, who’s working with Detroit Edison Co. on a similar venture. “The real value of what’s been done is to let the consumer make the choice.”
Calling it “reasonable and in the public interest,” the MPSC approved Consumers Energy’s green-power proposal on July 25, just two days after the utility filed an application seeking permission to launch the program as of Oct. 1 on a first-come, first-served basis.
Under terms of the program, Consumers Energy’s residential, commercial and industrial customers who want 100 percent of their electricity to come from renewable energy sources will pay a surcharge of 3 cents per kilowatt-hour. Customers seeking 50 percent of their power from green sources will pay an additional 1.5 cents per kilowatt, and those who wish to have 10 percent of their electricity from renewable sources will pay 0.3 cents per kilowatt-hour.
Residential customers of Consumers Energy now pay an average of 8.5 cents per kilowatt-hour of electricity. Commercial customers pay about 7.3 cents per kilowatt-hour.
Customers buying green power will also pay a nominal administrative charge that will cover Consumers Energy’s cost to administer the program.
The Jackson-based utility launched the initiative in response to growing customer demands for green power, as well as provisions in a 1999 state law that restructured Michigan’s electrical industry and encouraged utilities to offer a green-power alternative to their customers.
The Green Power Pilot Program allows customers “to financially support the development of new, non-traditional generators that use the sun, the wind and other renewable energy sources in our state,” said David Joos, president and CEO of Consumers Energy’s Electric Division.
“Some of our customers have a strong interest in renewables. This pilot program should give them the opportunity they seek. Equally important, this will be a real opportunity for renewable energy generators to test the market for their services,” Joos said.
Consumers Energy, with 1.7 million electric customers statewide, has capped enrollment in the program to the equivalent of 50 mega-watts of generating capacity, or about 18,000 people. Customers can enroll anywhere between a minimum of one year and a maximum of 17 years.
If customers embrace green power, Consumers Energy may consider expanding the cap and extending the enrollment period beyond three years, spokesman Charles MacInnis said.
“This is designed to test the marketplace,” MacInnis said. “It’s just a way for the marketplace and customers to get together. If they are producing some electricity and customers are willing to pay for it, we’ll see how it goes.”
The question of whether people will pay more for green power is the key to the pilot, said Craig Brumels, a partner in Michigan Wind Energy LLC, which is working to develop a wind turbine near Lake Michigan in Oceana County.
“That’s the big thing — will people pay more?” Brumels said. “It’s going to be interesting to see what will happen.”
Brumels hopes the Consumers Energy pilot “lights a fire” under other electric utilities in Michigan to launch similar initiatives and further open the market for green power producers.
“It keeps the pressure on is what it does,” Brumels said. “It helps to move them in the right direction and it shows that there are people out there who are serious about this.”
“We’ve just got to get the utilities looking in a little different direction.”
Consumers Energy will purchase green power from producers on a first-come, first-served basis and put them in line to buy their power as customers enroll. Renewable energy ventures will have to go through a certification process to demonstrate that their electricity is generated by renewable sources.
“What we would like is for producers to come forward with a viable business plan, and once they’ve provided a viable business plan, we’ll put them in the queue,” said Scott Brockett, supervisor of pricing and revenue forecasting for Consumers Energy.