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Detroit Edison Proposal for Renewable Energy Falls Short

Lansing, Mich. - A proposed Detroit Edison plan on how to acquire renewable energy blatantly disregards requirements of Michigan's new Clean, Renewable and Efficient Energy Act (Act 295) to the detriment of consumers and should be rejected by the Michigan Public Service Commission (MPSC), according to written testimony filed by the Electric Power Supply Association (EPSA) on behalf of the Michigan Wholesale Power Association. EPSA's testimony highlighted serious deficiencies in Detroit Edisons plan to comply with a new state law requiring that 10 percent of electric capacity come from renewable sources, expected to be primarily wind generation.

In EPSA's testimony, Daniel Dolan, vice president of policy, research and analysis, analyzed Detroit Edison's Renewable Energy Plan (REP), which under the new Michigan law must provide details on how future competitive procurement processes would be designed and how bids would be evaluated. However the utility's plan failed to set forth a proposed competitive bidding process for acquiring its renewable energy and credits, flatly rejected the use of a collaborative process or independent monitor in future procurements because Detroit Edison said, "these activities are already subject to sufficient oversight," and demonstrated a propensity to favor utility self-built projects over the purchase of renewable energy from third parties.

Dolan said, "Setting a clear framework for how the best possible resources for consumer needs will be selected at this early stage may well save time, expense and confusion and provide consumers confidence that whatever resource is selected will be the lowest risk, best fit option. Unfortunately, Detroit Edison doesn't include any proposed details of the procurement process, an odd omission because Act 295 mandates that a description be included," he said. "The result is to deny consumers and other stakeholders the right to examine the competitive bidding proposal in a contested case proceeding as lawmakers envisioned."

Detroit Edison's plan completely disregards a 2008 report by the National Association of Regulatory Utility Commissioners and the Federal Energy Regulatory Commission that outlines characteristics common to successful energy procurements, including collaboration and the use of an independent monitor. The NARUC/FERC report is widely recognized as an excellent guide on how to design an effective process, according to Dolan.

In contrast to the 2008 report, he said, "Detroit Edison's REP demonstrates a dangerous tendency to favor utility-build projects over the purchase of renewable energy supply from third parties. This propensity to view power purchase agreements unfavorably suggests that Detroit Edison will not treat all market participants in a 'fair and nondiscriminatory manner' as Act 295 requires."

Dolan concluded, "The Commission should reject Detroit Edison's REP unless Edison agrees to include a process for competitive bidding and allows its own proposals to be judged against the same criteria that are to be employed in evaluating third party proposals." The testimony is available at www.epsa.org under "Recent Filings." The 2008 NARUC/FERC report is available at

http://www.naruc.org/Ferc/default.cfm?c=1

CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660

EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.