Power by the People: Renewable Energy Reduces the Highest Electric Rates in the Nation

Coal is the main fuel origin for Midwest electric utilities. Michigan Technological University researchers discovered that increasing renewable and distributed production energy sources can save Michigan electric customers money.

As renewable energy technologies and access to distributed generation like residential solar panels increase, consumer costs for power decrease. Making electricity for yourself with solar has become more affordable than conventional electricity fuel springs like coal.

However, as three Michigan Tech researchers fight in a new study, while utility fuel mixes are slowly turning away from fossil fuels toward renewable sources, Michigan utilities, and U.S. services broadly, continue a connection with fossil fuels that is harmful to their clients.

The paper, “Policies to Overcome Obstacles for Renewable Energy Distributed Generation: A Case Study of Utility Structure and Regulatory Regimes in Michigan,” was written in the energy policy special issue of the journal Energies (DOI: 10.3390/en12040674).

“Michigan utilities are starting to recognize the benefits of solar (and other renewables),” said Emily Prehoda, lead author of the paper at Michigan Tech. “Some utilities are even shifting their duties to include large-scale solar and wind creation. However, utilities fear fight from, and actively hinder proliferation of, dispersed generation systems by clinging to the old utility model.”

In the paper, Prehoda and co-authors Joshua M. Pearce, Richard Witte Endowed Professor of Materials Science and Engineering, and Chelsea Schelly, noted that in the U.S., “60 percent of coal plants run at a greater cost than new renewable energy and by 2050 all of them will.”

The researchers provide an analysis of savings per kilowatt hour by the county that Michigan citizens could achieve if they produce their own power with solar panels.

The most important impacts of distributed generation with solar are in the Upper Peninsula, where private customers could see savings of about 7 cents per kilowatt-hour. Assuming the average residential consumer uses 600-kilowatt hours of electricity regularly, this is a savings of $82 per utility bill. Downstate, the average increases per utility bill under the researchers’ model is approximately $40 monthly.

However, not all Michigan consumers can take benefit of the opportunity to self-generate, as some businesses are blocking additional net-metered distributed production in their areas.

“Refusing to allow Michigan customers to have the opportunity to introduce cheaper and reliable electricity sources denies the electrical grid of many benefits,” Prehoda said. One such benefit is producing a more decentralized electric grid less vulnerable to attack.

According to the Michigan Public Service Commission’s (MPSC) 2017 annual report, Michigan’s use of coal as its main electricity fuel source has reduced (from 73.18 percent in 2009 to 37.41 percent in 2016), and that void has been fueled mainly by natural gas, energy waste mitigation and renewable energy (which increased from 4 percent in 2009 to 9.67 percent in 2016). In Michigan, 74 percent of residents get electricity from for-profit corporations like UPPCO and Consumers Energy.

In early 2019, Consumers Energy, which produces electricity to many Lower Peninsula communities, was approved for a rate increase that equates to a $1.96 increase per month for clients.

While in the past MPSC has lowered the number of requested rate rises, the commission has not denied a rate spread.

Yet, as this study shows, if utilities allow customers to generate their own energy in addition to the power they use from the grid, residential customers would see a large decrease in their electric rate by producing their own solar electricity.

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