The American Council for an Energy Efficient Economy (ACEEE) reported that the Michigan legislature passed a significant utility Energy Efficiency Resource Standard (EERS) as a part of comprehensive energy legislation. The bill (SB213) contains an EERS that starts with an annual electricity savings requirement of 0.3 percent of total sales in 2009, ramping up to 1 percent per year by 2012, and continues at that level each year thereafter (0.75 percent for natural gas utilities). Michigan joins 17 other states that have EERSs, according to ACEEE’s latest tally. This is a significant achievement for Michigan, which has had no utility energy efficiency resource programs since 1995, said ACEEE.

ACEEE Utilities Program Director, Dr. Martin Kushler, who resides in Michigan, was extensively involved in developing this new state policy. After the legislation passed both chambers on Sept. 18, he noted, “This is a big step forward for Michigan, and personally, I’m pleased that my home state will no longer be known as the ‘no-program control group’ for energy program evaluations in other states.”

The energy efficiency components of this legislation were patterned after the analyses conducted as part of the “Michigan 21st Century Electric Energy Plan” that was released by the Michigan Public Service Commission in 2007. That plan concluded that energy efficiency of this magnitude would save Michigan ratepayers over $3 billion, and avoid the need for two additional major baseload power plants.

A related 2007 ACEEE study, co-authored by Dr. Kushler, reported that energy efficiency can actually reduce overall electricity costs, boost net employment, and reduce air pollutants within the state. The study stated that greater energy productivity would result in a net annual employment increase of between 3,900 and 10,000 jobs (depending on the level of energy efficiency policy pursued).

This new Michigan legislation also authorizes “shareholder incentives” for utilities that exceed the energy savings requirements, and contains a provision allowing for “decoupling” for natural gas utilities that provide energy efficiency programs. The legislative package also includes a renewable portfolio standard (RPS), which ramps up to 10 percent of total sales by 2015.

Publication date:10/27/2008