STATE OF MICHIGAN

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter, on the Commission's own )
Motion, to establish the Michigan ) Case No. U-12915
Renewables Energy Program. )
_________________________)

Comments of
The Great Lakes Renewable Energy Association

Regarding the Michigan Renewables Energy Program

In accordance with the Commission's April 17, 2001 Order in this proceeding, The Great Lakes Renewable Energy Association submits, herein, it's comments regarding the Michigan Renewables Energy Program contemplated by 2000 PA 141 Section 10r (6) and the December 14, 2001 program proposal submitted by the Executive Secretary Division of the Michigan Public Service Commission. The Commissions April 17, 2001 Order stated:

"In light of the statutory mandate, the Commission finds that a proceeding should be initiated to receive public comments regarding the Staff's December 14, 2000 proposal for implementation of the Michigan Renewables Energy Program. In particular, the Commission seeks comments regarding how the Staff's proposals may be designed and implemented through use of existing or new funding mechanisms and through coordination with educational programs. In addition, the Commission welcomes comments regarding how the performance of the Michigan Renewables Energy Program should be measured"

The Great Lakes Renewable Energy Association (GLREA) believes that programs to promote the use of, educate the public regarding, and provide incentives for the use of renewable energy and energy efficient products are necessary. The continued depletion of fossil fuels and its accompanying pollution and degradation of the environment are no longer options.

1. Renewables Program Core Provisions Recommended by the GLREA

The Great Lakes Renewable Energy Association believes a Michigan Renewables Energy Program should contain the following core provisions:

A. Education

The GLREA believes education is one of the most important factors. This includes education of the general public, builders, code officials, and installers. New homes, including low income housing, need to be built with passive energy efficiency and integrated systems of solar, wind and fuel cells to significantly reduce the use of fossil fuels in Michigan. Simply giving away money to pay low-income families energy bills does nothing to solve the energy problem. Education regarding the use of renewable technologies and energy efficiency, and promoting their use in the marketplace, are the only long-term solutions.

B. Renewable Energy Services as a Profession

Renewable Energy Practitioner should be a stand-alone profession, similar to the home building profession. A training and certification program needs to be implemented by the state. The program should include system design and components tested for use in Michigan, certification of installers, and training of code officials. GLREA currently has apprentice and advanced certification programs for grid-connected photovoltaics in place, which it developed with the assistance of Detroit Edison and Bekaert ECD Solar Systems LLC of Troy, Michigan, and has been awarded funding support from the U.S. Department of Energy to advance it. The programs are managed by the GLREA Professional Certification Board. Elevating renewable energy services to a profession will help promote a long-term and reliable renewable energy industry.

C. Property Tax Limits

Increased property tax is one of the big deterrents to adding renewable and energy efficient products to new and existing homes and businesses. The GLREA is in favor of a property tax exemption for all renewable energy equipment (including energy efficiency) installed in privately owned and used residences and businesses. Other systems, such as energy farms and third party owned systems, should have property tax limited to the total dollar value of the property tax paid on an equivalent capacity of natural gas-fired electric generating equipment. This should be a life long exemption to the property. No tax losses will occur with this program, since these projects will not happen if taxes continue to exceed the value of the product (electricity).

D. State Sales Tax Exemption

The state of Michigan sales tax disproportionately taxes renewables facilities compared to equivalent fossil-fueled generating equipment. The GLREA recommends that renewable energy equipment be exempt from the Michigan sales tax. A 1 kilowatt solar photovoltaic residential installation costs approximately $12,000, compared to approximately $300 for a gas-fired engine, generating a regressive tax that is greater than the total cost of the competing technology. An exemption for renewables will not cause the state to lose tax revenues since most potential customers for renewable energy systems will be dissuaded from making the investment on the basis of the sales taxes alone.

E. Low Interest Financing

Financing is another deterrent to buying renewables. The GLREA recommends establishing a renewables fund to provide zero-interest loans to individuals. Low-interest loans should also be made available for businesses at an interest rate equal to the interest rate allowable for financing pollution control equipment. The fund would be a self-sustaining revolving account and should be administered by the state. Low interest financing will stimulate the renewables industry in Michigan, resulting in jobs and revenues to the state that should more than offset the costs of operating the fund.

These five program elements will help promote the use of clean energy and provide incentives for people to buy renewable energy and energy efficient products. Incentives which sunset create only temporary solutions and do not support a long-term change for the industry.

2. Renewables Program Provisions Recommended by MPSC Staff

As noted in the December 14, 2001 program proposal, several states, including Michigan have developed and implemented regulatory programs and policies to promote renewable energy and reduce the barriers to developing renewable resources. Some of them are very good and some have not been as effective. The GLREA's comments on each of the items mentioned in the report are as follows:

A. Renewable Electricity Portfolio Standard and Set-Asides for New Generation

The GLREA supports a green power standard if the green portion of power sold in the state is generated within Michigan and if all companies selling power within the state are required to have a minimum green standard. Our concern for minimum standards is that they can establish a demand that is larger than the supply and prices for green energy could become artificially high.

B. System Benefits Charge/Public Benefit Charge

The GLREA supports a benefits charge and feels that the money should go into a fund to support the long term growth of the industry and not to give-away programs that will only have temporary effects.

C. Net Metering Rules

The GLREA supports net metering for small residential wind and solar systems of no more than 10 kilowatts in capacity and believes that any program should apply to all utilities selling power within the state. Because a net metering rate does not allow for a time benefit rate structure, such as the Distributed Generation rate approved by the Commission for Detroit Edison, we feel it should be optional to the customer. In addition any accounts showing a balance owed from the utility at the end of the year should be zeroed out.

D. Disclosure and Certification

The GLREA supports this policy and believes it should apply to all suppliers coming into the state.

E. Line Extension Analysis and Policies

The GLREA believes that there are too many variables in this kind of program and with the break-up of generation and distribution it is probably an unworkable idea. It would be better to educate the public on energy alternatives through other means and put efforts into growing the renewable industry.

F. Research and Outreach

There are several renewable energy research centers in the country. Any Michigan funded research should focus on two areas:

1) what works best in Michigan, and

2) how to commercialize systems and grow the industry.

G. Contractor Licensing and Training

The GLREA strongly supports this and has designed both apprenticeship and advanced licensing seminars for grid-connected photovoltaics. The current HVAC licensing program for solar thermal systems installers is unworkable for Michigan contractors and should be eliminated. A training program that includes all areas of renewables should be established as a stand-alone profession.

H. Equipment Certification/Pre-certification

The GLREA agrees that all solar equipment should be certified and that components should be designed and tested for Michigan climates since systems often perform differently in other climate areas.

I. State Construction Policies

In order to promote energy efficiency and renewables, the state should be fully engaged in the construction and use of energy efficiency principals and renewable energy technology in high profile state-owned facilities.

J. Solar and Wind Access

Solar access laws make sense and the GLREA supports them realizing that there may be some practical limitations to their implementation. Buildings constructed with solar windows or roofing systems need to be assured that their solar access will not someday be eliminated. In addition, many local townships lack or prohibit provisions for use of wind technology even though it could be reasonably implemented.

3. Additional Renewables Program Provisions Recommended by the GLREA

In addition to the programs above contained in the Michigan Renewables Program proposal, the Great Lakes Renewable Energy Association recommends:

A. Siting Systems

GLREA supports a provision that will prevent communities from prohibiting renewables. Established areas, such as rooftops, should be zoned for renewables. The GLREA recommends that the state enact, through regulation or law, a requirement that in communities of 2,000 residents and above, renewables energy park areas of 0.5 kilowatts or more per residence should be established.

B. Renewable Energy Center

In other areas of the country, renewable energy educational and training facilities exist, but currently there is nothing equivalent in the Great Lakes region. GLREA envisions a facility located within the state that will demonstrate the technology suitable for our area in the design of its facilities and educate the public as to what is possible in our region.

The GLREA sees this last recommendation, a Renewable Energy Center in Michigan, as the physical centerpiece of a Michigan Renewables Energy Program and would like to expand upon it:

A combined research, conference, educational, and sustainability museum center will attract people from the region and all over the country. It should be associated with a state university and provide accredited education in renewable energy technology. The facility will generate income through its educational programs and community outreach, and will become a sustainable working facility. It will also be a regional facility that can attract federal funding. It will advance energy efficiency by promoting and demonstrating the cost effective integration of renewable energy technology and principles in home and commercial construction. A mandate for the Center can be development and promotion of affordable, new low income housing designed for energy efficiency. This will have a long term impact on reducing low income energy bills and be in keeping with the objectives of the low income support and energy efficiency which is the primary focus for the funding created by P.A. 141. A Renewable Energy Center will use these funds as leverage for additional funding from federal, state and private sources and will further the legislature's objectives and provide even greater benefits to the state.

The projected $300 million in Detroit Edison's securitization funds will soon begin to become available. The GLREA believes that 25% of these funds should go into developing renewables within the state. This would provide $75 million, and it should be divided half ($37.5 million) for construction of a regional renewables and sustainability educational center and the remaining half to establish an endowment fund to support the center's operation, including a scholarship program for advanced studies in renewable energy and sustainability.

The commission should set up a team to design and establish the center. A design competition will go a long way toward educating tomorrow's architects and engineering students on the different aspects and possibilities of renewables technology. GLREA is ready to work with and on this team.

The GLREA believes that the elements of the Renewables Energy Program recommended herein, and the proposed Renewable Energy Center, will establish Michigan as a leader in the effort to provide long term, sustainable, economic and environmentally sound energy solutions. As a state that prides itself on its clean air and water and the beauty of its outdoors, Michigan needs to be actively involved in promoting clean energy alternatives for the future of our citizens and that of our children.

The Great Lakes Renewable Energy Association respectfully requests that the Commission consider its comments in creating and administering the Michigan's Renewables Energy Program. The Great Lakes Renewable Energy Association offers its assistance as a participant in further Commission proceedings and committees that may be established for the creation and administration of the program.

Submitted May 17, 2001

by the GLREA Board of Directors

GLREA follow up comments

Michigan Renewables Energy Program staff report

Other comments to the MPSC

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