Michigan Passes Sweeping Package of Clean and Renewable Energy Bills

Before the Michigan Legislature adjourned for the year, it passed a sweeping package of seven energy-related bills—HB 5120 and HB 5121, SB 271, SB 273, SB 502, SB 519, and SB 277. The package now awaits Governor Whitmer’s signature.

House Bill 5120 would give the Michigan Public Service Commission (MPSC) authority over siting of wind projects with generation larger than 100 megawatts, and solar and battery storage projects with generation larger than 50 megawatts. Under HB 5120, local municipalities may retain local control if they adopt a renewable energy ordinance no stricter than the bill’s provisions. If a local government has a compatible renewable energy ordinance, then the electric provider would be required to seek the approval of the local government, although there remain avenues for the provider to obtain MPSC approval.

House Bill 5121 would subject zoning ordinances to Part 8 of the Clean and Renewable Energy Waste Reduction Act and requires a renewable energy project that received present or former special land use approval to meet specific requirements.

Senate Bill 271 requires electric providers to achieve a renewable energy credit portfolio of 15% through 2029, 50% by 2030, and 60% by 2035. Each electric provider would have to meet the renewable energy standard with renewable energy credits obtained by generating electricity from renewable energy systems for sale to retail customers, purchasing or otherwise acquiring renewable energy and capacity, or purchasing or otherwise acquiring renewable energy credits without the associated renewable energy or capacity. However, renewable energy credits acquired cannot exceed 5% of an electric provider’s renewable energy credits annually. Under SB 271, the provider may recover the incremental cost of compliance to implement the renewable energy plan.

Likewise, SB 271 requires all electric providers to achieve a clean energy portfolio of 80% by 2035 and 100% by 2040. The bill also would amend caps and other provisions for distributed generation. Under SB 271, a clean energy system is defined an electricity generation facility or system that either generates electricity or steam without emitting greenhouse gas, including nuclear generation, is fueled by natural gas and uses carbon capture and storage that is at least 90% effective in capturing and permanently storing carbon dioxide, is an independently owned combined cycle power plant fueled by natural gas that has a power purchase agreement with an electric provider and that receives Commission approval.

Senate Bill 273 would require electric providers to file energy waste reduction plans, which may include an efficient electrification measures plan. Under this bill, energy waste reduction plans may authorize a commensurate financial incentive for the provider for exceeding the energy waste reduction standard. An electric provider’s energy waste reduction programs would have to collectively achieve incremental energy savings equivalent to 1.5% of total retail electricity sales in megawatt hours in the preceding year. The bill also requires electric providers and natural gas providers to offer low-income energy waste reduction programs and to invest in hiring and developing a diverse energy waste reduction workforce.

Senate Bill 502 would increase the amounts that utility companies must pay in cost recovery cases to the Utility Consumer Representation Fund. The bill would also require the MPSC to commence a proceeding to discuss the electrification of transportation, buildings, and industries and to identify environmental justice communities. Under SB 502, proposed Integrated Resource Plans must now include both the proposed long-term forecast of greenhouse gas emissions and other pollutants from power generated or purchased by the electric utility and an environmental justice impact analysis that includes a review of the anticipated justice impacts. This bill requires the MPSC to conduct at least four public meetings, hearings, townhalls, or other opportunities for public engagement.

Senate Bill 519 would establish the Community and Worker Economic Transition Office, within the Department of Labor and Economic Opportunity. This office would help communities and workers during the renewable energy transition.

Senate Bill 277 would permit farmers to rent their land for renewable energy production while also being able to keep their farmland participating in the Farmland Preservation Program. Under this program, landowners apply to enroll their farmland in an agreement with the state that restricts the use of the land to farming.

For more information about this alert, please contact Richard Aaron, Jason Hanselman, Andrew Hussey, or your Dykema relationship attorney.