The fight over the proposed 25 by ’25 constitutional amendment has brought out vocal groups on either side of the issue. MiBiz reached out to spokespersons for the amendment and against it and offered them the opportunity to justify their positions.
LANSING — As the November election looms, so does a decision over Michigan’s energy future.
The state’s current renewable energy standard (RES), which requires the utility companies to get 10 percent of their electrical power from renewable sources by 2015, could be increased to 25 percent by 2025 if a constitutional ballot proposal passes.
Proponents of more renewable energy say the state needs to capitalize on an economic opportunity to take control of its energy picture and simultaneously create new jobs. Opponents say the move could be too costly for ratepayers and industry, not to mention the utilities, and could actually cost the state jobs.
Out in front of the proposal are two interest groups both entrenched in a daily media battle. Each side’s efforts are making the 25 by ’25 proposal one of the most charged issues on the ballot.
Michigan Energy, Michigan Jobs, the group responsible for the proposal, claims an increased renewable energy standard could bring $10 billion of investment to the state and create thousands of temporary and permanent jobs as utilities bring on new alternative energy production capacity.
But the Clean Affordable Renewable Energy for Michigan Coalition opposes the proposal, saying it could cost businesses and consumers roughly $12 billion in higher utility bills. The opponents argue a 1-percent annual increase on rates wouldn’t cover utilities’ costs for buying and installing the alternative energy capacity.
“By extending the RES, we are going to assure Michigan will be at the forefront of the advanced energy economy,” said Steven Linder, managing partner of the Sterling Corporation, a right-of-center lobby group that supports the initiative. “We have underutilized capabilities here. Michigan still has the highest number of manufacturing engineers in the nation. The University of Michigan is a hotbed of cutting-edge new energy technology. This is not anti-utility. This is about the energy sector. We are not environmentalists, we support business solutions.”
Opponents of the proposal question backers’ specious job claims and say the current framework for the adoption of renewable energy is working. Still, Michigan Energy, Michigan Jobs says the move to increase the renewable energy standard puts Michigan in a position to reap the economic rewards of a growing renewable energy sector.
“We’ve seen these kinds of jobs promises before, but they just don’t materialize,” said Megan Brown, spokesperson for CARE. “This is a complex business and requires thoughtful policy. We don’t want to cause more problems before we know what the future looks like.”
Many of the same arguments were made before the Michigan Legislature passed the existing renewable energy standard in 2008, sources say. That bill took almost two years of bipartisan deliberation and research before the Legislature approved it.
According to a February 2011 Michigan Public Service Commission report, both of the state’s major energy utilities have seen much lower prices for renewable energy than originally expected. Wind projects have an averaged levelized cost of $101.78 per megawatt hour, compared to the forecast cost of $115 per megawatt hour for wind when the renewable standard was implemented, according to the report. The report also stated the levelized cost for a modern coal-fired power plant was $133 per megawatt hour. A levelized cost compares dissimilar resources based on life cycle costs.
However, the utilities have been increasingly turning to cheap natural gas for electric generation. The opponents of the ballot initiative say locking the utilities to renewable energy generation doesn’t allow them to make market-based decisions even though state law requires them to maintain the state’s electric capacity.
The MPSC also reported that between 2008 and 2011, approximately $100 million was invested in alternative energy projects. Part of this investment translates to nearly 1,000 megawatts of new wind capacity since the 10 percent standard took effect.
Both Consumers Energy and DTE have made investments in more renewable generation, primarily in wind farms. Both companies are expected to hit the 10 percent mark by 2015. MiBiz previously reported that Consumers’ Lake Winds project will add about 100 megawatts of renewable energy to the grid and will raise the utility’s renewable generation to around 8 percent of its total portfolio.
“This is about changing the conversation about how America is going to power its future,” Linder said. “I’m for coal, I’m for gas, I’m for nuclear, I’m for biomass. I’m for it all, but we can’t have monopolies controlling our energy future. Consumers has been campaigning its renewable energy projects heavily. If it’s so great, then let’s have more of it.”
Proponents of the amendment also don’t want Michigan to miss out on a limited opportunity given that other states have already adopted larger and more long-term renewable energy standards. They say the decision in Michigan hinges on whether the state wants to compete for renewable energy jobs that come to states that adopt renewable energy standards.
More than 30 other states have renewable energy targets similar to what’s outlined in the Michigan proposal. Illinois, Delaware and Minnesota have all embraced 25 percent by 2025 renewable energy initiatives.
Advocates for the increased standard point to approximately $1.8 billion a year it costs to import coal to the state. With renewable generation, supporters say fuel costs are essentially reduced to zero after the initial building expense, although most alternative energy sources are variable in nature. Proponents also argue that the health benefits associated with more renewable power are big incentives to protect the state’s quality of life.
Concerns over reliability and hasty decision-making form the opposition’s ideology. CARE insists that any consideration to raise the state’s standard should wait until after 2015 — the target date for the current renewable energy standard. At that time, policymakers should come together to evaluate key factors and decide if an increased RES is merited or if they should pursue other options, they say.
The current standard was set after a very deliberate process said Rick Baker, president of the Grand Rapids Area Chamber of Commerce.
“One of our concerns is that 25 by 2025 is an arbitrary number without all of the due diligence, without determining the real cost and impact on our industries,” he said. “To put it in the constitution and usurp the legislative process, without first going the proper assessment is dangerous. We should be thinking about how we can change the legislative process.”
The amendment’s supporters say the utilities have steadily increased their renewable portfolios by 1 percent to 2 percent each year. Advocates also indicated that extending the renewable energy standard to the 25-percent mark another 12 years down the road provides the utilities with ample time to comply.
The groups on either side of the issue also clash over whether energy policy should be handled as a constitutional matter. CARE believes a constitutional mandate is reckless and doesn’t allow flexibility if the 25 percent goal can’t be met on time. Sterling Corp’s Linder says he wishes there was another way to increase the renewable energy standard, but he believes a constitutional amendment is the only way to get it done.
The utilities haven’t been very willing to work with the supporters of the proposal, he said. Using the ballot method and public support is the only option in this scenario, Linder added.