Legislative Analysis
Phone: (517) 373-8080
CLEAN AND RENEWABLE ENERGY STANDARDS
http://www.house.mi.gov/hfa
Senate Bill 271 (S-3) as passed by the Senate Analysis available at
Sponsor: Sen. Erika Geiss http://www.legislature.mi.gov
House Committee: Energy, Communications, and Technology
Senate Committee: Energy and Environment
Revised 11-1-23
SUMMARY:
Senate Bill 271 would amend the Clean and Renewable Energy and Energy Waste Reduction
Act, primarily to add or change provisions related to clean and renewable energy requirements
under the act’s Part 2 (Energy Standards), as described below, and make related changes to
defined terms or other substantive provisions. The bill also would include provisions related to
energy storage and increase the cap on distributed generation.
Renewable energy credit portfolio requirements
The bill would require an electric provider to achieve a renewable energy credit portfolio of
at least the following (the act currently requires 15% beginning in 2021.):
• 15% through 2029.
• 50% in 2030 through 2034.
• 60% beginning in 2035.
The bill would require electricity sales to customers participating in an electric provider’s
voluntary green pricing program and the outflow from distributed generation customers to be
subtracted from the number of megawatt hours of the provider that are used to calculate the
renewable energy credit portfolio under the standard determination in the act.
Except as described below, each electric provider would have to meet the renewable energy
standards with renewable energy credits obtained by any of the following means:
• Generating electricity from renewable energy systems for sale to retail customers.
• Purchasing or otherwise acquiring renewable energy and capacity.
• Purchasing or otherwise acquiring renewable energy credits without the associated
renewable energy or capacity. Renewable energy credits acquired under this provision
could not exceed 5% of an electric provider’s renewable energy credits annually used
to comply with the renewable energy standard, unless, for a municipally owned electric
utility, the credits are produced in the territory of the regional transmission organization
the utility is a member of. The credits could not be used to comply with the renewable
energy standard after 2035. Renewable energy credits acquired under this provision
would not be subject to the siting requirements described below.
Renewable energy credit portfolio means the sum of the renewable energy credits
achieved by a provider for a particular year.
Renewable energy credit means a credit granted under the certification and tracking
program established under the act, which represents generated renewable energy.
House Fiscal Agency Page 1 of 13
 Renewable energy means electricity or steam generated using a renewable energy
system.
Renewable energy system would mean a facility, electricity generation system, or set
of electricity generation systems that use one or more renewable energy resources to
generate electricity or steam. Renewable energy system would include the following:
• A landfill gas recovery and electricity generation facility located in a landfill
whose operator employs best practices for methane gas collection and control
and emissions monitoring, as determined by the Department of Environment,
Great Lakes, and Energy (EGLE).
• A methane digester, if it processes only one or more of the following:
o Municipal wastewater treatment sludge, wastewater, or sewage.
o Food waste or food production and processing waste.
o Animal manure.
Renewable energy system would not include any of the following:
• A hydroelectric pumped storage facility.
• A hydroelectric facility that uses a dam constructed after October 6,
2008, unless the dam is a repair or replacement of a dam in existence
on October 6, 2008, or an upgrade of a dam in existence on October 6,
2008 that increases its energy efficiency.
• An incinerator, unless the incinerator is a municipal solid waste
incinerator that was generating power before January 1, 2023.
• A gasification facility.
• A facility that co-fires biomass with tires or tire-derived fuel.
Renewable energy resource would mean a resource that naturally replenishes over a
human, not a geological, time frame and that is ultimately derived from solar power,
water power, or wind power. Renewable energy resource would not include petroleum,
nuclear, natural gas, industrial waste, post-use polymers, tires, tire-derived fuel, plastic,
or coal, but would be a resource that comes from the sun or from thermal inertia of the
earth and minimizes the output of toxic material in the conversion of the energy.
Renewable energy resource would include all of the following:
• Biomass, as described in any of the following:
o Landfill gas as described below.
o Gas from a methane digester using only feedstock as described below.
o Biomass used by renewable energy systems that are in commercial
operation on the effective date of the bill.
o Trees and wood used in renewable energy systems placed in
commercial operation after the effective date of the bill, if the trees and
wood are derived from sustainably managed forests or procurement
systems, as defined in section 261c of the Management and Budget
Act. 1
• Solar and solar thermal energy.
• Wind energy.
1
http://legislature.mi.gov/doc.aspx?mcl-18-1261c
House Fiscal Agency SB 271 (S-3) as passed by the Senate Page 2 of 13
 • Kinetic energy of moving water, including waves, tides, currents, or water
released through a dam.
• Geothermal energy.
• Thermal energy produced from a geothermal heat pump.
• Landfill gas produced from solid waste facilities.
• Any of the following if used as feedstock in a methane digester:
o Municipal wastewater treatment sludge, wastewater, and sewage.
o Food waste and food production and processing waste.
o Animal manure.
Cooperative or multistate electric providers
A cooperative electric provider or multistate electric provider could calculate its maximum
renewable energy credit portfolio requirement in any years as follows:
• Determine the number of megawatt hours of electricity sold by the electric provider to
retail customers in this state using the provider’s option of a weather-normalized or
three-year-average basis, as described in the standard determination.
• Subtract the number of megawatt hours of nuclear energy that the electric provider
obtained from a system located in Michigan that the electric provider owned or had
contracted to receive nuclear energy from on or before January 1, 2024.
Cooperative electric provider would mean an entity that is a member of, or purchases
energy from, an entity that is either of the following:
• Organized as a cooperative corporation under sections 98 to 109 of 1931 PA
327. 2
• A cooperative corporation in the business of generating or transmitting
electricity.
A cooperative electric provider or multistate electric provider would have to achieve a
renewable energy credit portfolio equal only to the provider’s maximum renewable energy
credit portfolio requirement if the provider’s maximum requirement is less than the number of
renewable energy credits required to comply with the applicable standard described above. If
the electric provider is a multistate electric provider, and the electric provider’s maximum
renewable energy credit portfolio requirement is less than the number of renewable energy
credits required to comply with the applicable standard, the electric provider would be required
to achieve a renewable energy credit portfolio equal only to the electric provider’s maximum
renewable energy credit portfolio requirement if all of the following requirements are met:
• The electric provider’s electricity generation systems located in Michigan produce
energy exceeding the electric provider’s electricity sales in Michigan.
• All of the electric provider’s electricity generation systems located in Michigan are
clean energy systems.
• All of the renewable energy credits generated in Michigan are used by the electric
provider toward compliance with the renewable energy credit portfolio calculated
under the standard determination.
• Renewable energy and clean energy generated in Michigan equal to or exceeding the
provider’s electricity sales in Michigan are not used by the provider or any other
provider to comply with any similar standards.
2
http://legislature.mi.gov/doc.aspx?mcl-act-327-of-1931
House Fiscal Agency SB 271 (S-3) as passed by the Senate Page 3 of 13
 Location requirements
The bill would provide that a renewable energy system that is the source of renewable energy
credits used to satisfy the renewable energy standards must be located in Michigan or, if located
outside of Michigan, the electric provider must include the capacity from the renewable energy
system toward meeting its resource adequacy obligations to the applicable regional
transmission organization. However, this provision does not require an electric provider to
procure firm transmission rights to ensure deliverability to the resource adequacy zone where
the load is served. In addition, the provision does not apply if electricity generated from the
renewable energy system is sold by a not-for-profit entity located in Indiana, Ohio, or
Wisconsin to a municipally owned electric utility in this state or cooperative electric utility in
this state, and the electricity is not being used to meet another state’s standard for renewable
energy.
Resource adequacy would mean having sufficient resources to provide customers with
a continuous supply of electricity at the proper voltage and frequency, virtually always
and across a range of reasonably foreseeable conditions.
Renewable energy credits produced in the continental United States and owned by a customer
of an electric provider could be utilized by the electric provider to meet the renewable energy
credit standards if the electric customer chooses to report renewable energy credits to its
electric provider as attributable to the customer’s electric load. Any renewable energy credits
reported by an electric customer for use by its electric provider would have to be applied to the
electric customer’s proportional share of a renewable energy credit portfolio requirement for
the year in which renewable energy credits are used to comply with the renewable energy credit
standard. On an annual basis, not later than December 1, the electric customer would have to
provide the electric provider with an update on its five-year forecast and notify the electric
provider of the expected amount of renewable energy credits to be used toward compliance in
the coming year. If the projected amount of renewable energy credits available for compliance
will be less than what the electric customer projected in its five-year forecast, the electric
customer would have to notify the electric provider at least five years before the compliance
year in which a projected reduction in renewable energy credits will occur. If the electric
provider’s rates are regulated by the Michigan Public Service Commission (MPSC) and the
electric provider uses the reported renewable energy credits to comply with the renewable
energy credit portfolio standard, the electric provider would have to grant the customer an
appropriate cost-based rate credit against the cost of compliance under the act.
For purposes of the above paragraph, customer would mean either of the following:
• A customer taking service under a rate approved by the MPSC under section
10gg of 1939 PA 3, the MPSC enabling act. 3
• A customer whose manufacturing complex is described in section 10a(4)(c) of
the MPSC enabling act and that takes service for a portion of its load from an
alternative electric supplier licensed under section 10a on the bill’s effective
date. 4
The bill would remove several location requirements that now apply to wind energy systems.
3
http://legislature.mi.gov/doc.aspx?mcl-460-10gg
4
http://legislature.mi.gov/doc.aspx?mcl-460-10a
House Fiscal Agency SB 271 (S-3) as passed by the Senate Page 4 of 13
 Extensions for good cause shown
Upon petition by an electric provider, the MPSC could, upon a showing of good cause, grant
an extension of a renewable energy credit portfolio deadline. Each extension could not exceed
two years. An extension of a deadline would not affect a subsequent deadline. Upon granting
an additional extension for a particular renewable energy credit portfolio deadline beyond the
first two extensions, the MPSC would have to notify specified legislative leaders that it has
done so and the reasons.
In such a petition, an electric provider would have to include a plan for resolving the barrier to
compliance and make a showing of good cause by demonstrating any of the following:
• Despite all commercially reasonable efforts by the electric provider to comply with the
deadline, compliance is not practically feasible for reasons such as zoning, siting,
permitting, supply chains, transmission interconnection, labor shortages, delays in
project deliverability from developers, or unanticipated load growth. Issuing a request
for proposals to purchase renewable energy and not receiving a commercially viable
offer would create a rebuttable presumption that compliance with the deadline is not
practically feasible.
• Compliance would be excessively costly to customers despite commercially reasonable
efforts by the electric provider to contain costs.
• Compliance would result in a deficiency in meeting resource adequacy requirements
in the electric provider’s service territory.
• Compliance would result in a local grid reliability issue.
Grid reliability would mean the ability of the bulk power system, as defined by the
regional transmission organization, to withstand sudden, unexpected disturbances,
such as short circuits or unanticipated loss of system elements because of natural
causes.
Energy waste reduction credit substitution
The bill would require an electric provider to have achieved annual incremental energy savings
of greater than 2% under an energy waste reduction plan in order to be able to substitute energy
waste reduction credits for renewable energy credits to meet the renewable energy standards if
approved by the MPSC.
Financial incentive
If an electric provider subject to MPSC rate regulation enters into a purchase power agreement
for renewable energy resources or a third-party contract for an energy storage system or clean
energy system with an entity that is not an affiliate, the MPSC would have to authorize an
annual financial incentive for the electric provider. The financial incentive would have to be
calculated as the product of contract payments in that year multiplied by the electric provider’s
pre-tax weighted average cost of permanent capital consisting of long-term debt obligations
and equity of the electric provider’s total capital structure as determined by the MPSC’s final
order in the electric provider’s most recent general rate case. The pre-tax