Will Voters Boost Michigan Jobs with More Michigan Energy?

September 12, 2012 | |

Solar panels at a rest stop in Clare along U.S. 127. (Photo: Michigan Energy Michigan Jobs)

They’ve confirmed the petition signatures and approved the ballot language.

Now, it’s up to Michigan voters: Should the state boost its mild-mannered renewable energy standard and position itself to become one of the country’s, and the world’s, leading manufacturers of renewable energy technologies?

Proposal 3, also known as the “25 x 25” or “Michigan Energy, Michigan Jobs” proposal, commits Michigan to do what 10 of 29 other states with renewables standards are already working on: getting 25 percent of their electricity from renewables by 2025.

While states with strong renewable energy standards are seeing good job growth as manufacturers set up shop within their borders to make parts for solar panels, wind turbines, and other renewable generating technologies, advocates here say that if Prop. 3 passes, job growth in Michigan would be much stronger.

They paint quite a picture: Just as Michigan became rich and powerful by putting the world on wheels last century, it could become remarkably prosperous in this one by exporting new energy technology to the world—wind, solar, biomass, geothermal, batteries, and more.

In fact, a recent Michigan State University study found Prop. 3 would create 74,000 new non-exportable, good-paying installation and maintenance jobs. The study also says that renewables manufacturing could increase sharply, and employ another 20,000 Michigan workers.

Those are big numbers—much larger than those seen in some other states with strong renewables goals. Why does MSU predict so many more jobs here?

Advocates explain that Michigan has several aces up its sleeve that trump other states, including a century-long industrial tradition; peerless traditional and high-tech manufacturing expertise; three great research universities; more energy technology patents than any other state; a skilled, motivated manufacturing work force; and international rail and seaway hubs.

In other words, as renewables go global (Wells Fargo, Goldman Sachs, and Bank of America this year announced $120 billion of new investment in clean energy), few other places can cash in like Michigan. In fact, if Michigan were able to capture most of the country’s future renewables manufacturing as it did for decades with automobiles, the new jobs numbers would soar past 100,000.

But little will happen, supporters say, unless manufacturing companies are first drawn to the state by a strong “home” market. That is what Prop. 3 is designed to do: establish an energy policy that triggers a $10 billion, 13-year investment in renewables.

However, the state’s two largest utilities, Consumers Energy and DTE Energy, are spending close to $6 million of their customers’ money to defeat 25 x 25, claiming it will jack up monthly electric bills because renewables are so expensive. They shrug off regulatory agency data that disproves that claim, as well as repeated surveys in Michigan and nationally that find widespread support for renewable energy—even if it costs ratepayers as much as $50 more a year.

Proposition 3 backers say they don’t need the $50 cushion. They see strong evidence that moving toward renewables is likely to slow, not speed up, monthly electric bill increases. And, they add, even if they are wrong, 25 x 25 protects all customers’ pocketbooks by capping those increases to no more than 1 percent per year.

Big Money, Small Costs

Prop. 3 uses brief, straightforward language that mirrors and amplifies Michigan’s current renewable energy mandate, Public Act 295, which requires 10 percent renewables by 2015.

The MPSC credits PA 295 with spurring $100 million in renewables investment in the first three years of its implementation. The Environmental Law and Policy Center estimated in 2011 that more than 10,000 Michiganders now work in the state’s renewable energy sector.

But passing the act proved to be very difficult. The state Legislature enacted it only after a long battle with utilities, which repeatedly predicted big electricity price increases because of those allegedly pricey renewables.

That battle largely took place within the statehouse. Now, with DTE and Consumers dumping $6 million into TV ads, Prop. 3 proponents have their hands full trying to shoot down the utilities’ cost claims and other attacks with just a $2 million budget, drawn largely from national environmental groups.

If facts matter in campaigns, however, the renewables folks seem well armed.

Their first bullet is the proposed amendment’s cap, which limits any electric rate increase due to renewables to 1 percent a year. That means a household with a $100 monthly electric bill would see no more than a one-dollar increase in its monthly bills in any given year—or $12 extra a year—a lot less than the $50 the survey considered.

Is even that small increase likely? If Consumers Energy’s renewables cost history is any guide, the answer is no.

After PA 295 was enacted, Consumers told state regulators that, to pay for its required new fleet of renewables—mostly wind power—it must tack on an extra $2.50 to every residential bill, every month, for decades.

Clean energy advocates guffawed and said the fee was way out of line, but MPSC approved the surcharge.

During the four years since PA 295 was enacted, and with a number of wind farms and solar installations online or on the way, Consumers repeatedly cut its monthly renewable energy surcharge; it now stands at just 52 cents—80 percent less than its first request. That is because, as renewables advocates predicted, the price of wind and solar power declined rapidly as Consumers added renewables.

The most recent wind power contracts in Michigan, according to the MPSC, came in at a bit more than one-half the cost for new coal power contracts—roughly 6.5 cents per kilowatt-hour for wind power, versus about 11.3 cents for new coal power.

Prop. 3 proponents argue that the price difference between new wind and new coal will only increase as the costs of renewables continue to fall and coal mining and transportation costs continue to climb. They also point out that the Midwestern state with the most wind power—Iowa, which so far in 2012 has generated 28 percent of its electricity with wind—saw the region’s smallest increases in electricity prices: just 4 percent over six years.

Meanwhile, Michigan, which so far in 2012 generated 0.8 percent of its electricity with wind, has seen a 30 percent increase in electricity prices over the same period—increases largely due to the rising cost of mining and delivering coal to the state.

But, critics ask, what if things go wrong and renewables’ annual rate increases exceed 1 percent?

Proposal 3 covers that, too: Utilities can hit the “pause” button and take more time to reach their goals, slowing down the rate increase.

Constitutional Questions

Prop. 3 opponents argue voters should not trifle with the state constitution to deal with something like energy. They warn that using the constitution that way makes for inflexible policies, so it’s smart to leave our energy future to state lawmakers.

But advocates say the 51-year-old constitution has been amended 31 times, covering everything from the Natural Resources Trust Fund and the drinking age to gay marriage, the Michigan Lottery, and stem cell research. To them, given how basic energy policy is to the state’s economic success, using the constitution makes complete sense.

They add that state regulators will write Prop. 3’s implementation rules, which is how Michigan always deals with new laws. If there’s a problem, regulators can change the rules, as long as they still reflect the amendment’s goals. And, they say, if people dislike Prop. 3’s effects, they can always vote the amendment out.

The “Let Lansing do it” argument mostly draws smiles and head shaking from renewables advocates. They recall how the state’s utilities used their formidable lobbying clout to drag out and water down PA 295. While what finally emerged was helpful, they say, it was far less than what leading states were already doing. What’s more, they add, some lawmakers are now pushing to repeal the act.

Why, proponents ask, should we keep fighting a battle so essential to the state’s business future, its environment, and its potential as a worldwide renewables leader? They assert that passing Prop. 3 is the only way to make sure Michigan keeps moving on renewables, becomes less vulnerable to fluctuating fuel prices and more able to generate prosperity and provide more predictable energy prices for consumers and businesses.

What will happen on Nov. 6, observers say, is anybody’s guess.

Statewide polls find strong support for 25 x25. The proposal seems a no-brainer, based largely on Michigan’s and other states’ successful history with renewables, the thousands of Michigan workers eager to get back to manufacturing, the many idled factories ready to produce new products, and a world racing toward a renewables energy future.

But advocates are worried, because, they say, it comes down to a race: Can $6 million in TV ads, the collective clout of the state’s dozens of utilities, and lawmakers who count on utility donations for their electoral campaigns beat out an idea that most others states—and many nations around the world—are quickly turning into a jobs-rich reality?

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at [email protected].

About the Author

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at  [email protected].

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