Steve Leone, Associate Editor, RenewableEnergyWorld.com
June 25, 2012 | 15 Comments
New Hampshire, USA -- Polls show that Americans like the concept of renewable energy. But cost-conscious American households and businesses are by nature wary of dramatic shifts in strategy. And they're equally reticent to make permanent changes to a state's constitution.
This is the friction at play right now in Michigan as the state gears up for a likely ballot initiative that would mandate a 25 percent renewables target by 2025. While this type of energy policy usually happens through the legislature, it will go straight to voters on Nov. 6 if supporters can secure more than 322,000 valid signatures by July 9.
Supporters hope to have a lot more signatures in hand by that date, and they’re working to get there by lining up business groups and some key office holders. On the other side are the state’s dominant utilities and largest business groups that worry such a bold mandate would drive up electricity prices and set a bad political precedence.
Michigan currently has a 10 percent target by 2015, and the state currently gets less than 4 percent of its electricity from renewable sources. According to initiative sponsor Michigan Energy, Michigan Jobs, the state currently fills 60 percent of its electricity needs from coal — all of it from out of state — and it spends $1.8 billion annually doing so. The group also contends that requiring a more localized, renewable energy mix would spur local job growth, bring $10 billion dollars of investment into the state and would keeping much of that money within its borders.
But others aren’t convinced the effort is needed. Initiative opponents who dubbed themselves Clean Affordable Renewable Energy for Michigan Coalition (CARE), launched a statewide effort Monday to sink the measure. According to the report, CARE will try to make the case that a renewables mandate doesn’t belong in the state’s constitution.
Michigan has been slow in adopting renewable energy, even as the state’s dominant utilities creep toward the 10 percent mark. The state has no large-scale solar facilities either in operation, under construction or under development, and it has less than 400 MW of wind capacity installed — a figure that lags far behind other Midwestern states like Iowa, Illinois and even its southern neighbor, Indiana. Michigan, however, is seen as a viable market for an American offshore wind industry looking to get off the ground. The state has a vast coastline that touches four of the five Great Lakes — Superior, Erie, Huron and Michigan — and large population centers that could be served by large-scale development.
Despite its low installation base and relatively high potential, the state is best known for its strong manufacturing base and a skilled workforce eager to tap into areas of growth.
The potential for job creation plays well across the state, which still suffers an unemployment rate above 8 percent. And in Detroit, Motor City residents have an unemployment rate hovering around 16 percent, among the highest for any U.S. city. But that doesn’t answer the biggest concerns from critics who feel that the estimated $10 billion investment needed to reach that 25 percent goal would sink businesses and residents under the weight of inevitable spikes in electricity costs.
Ballot initiative backers point to states like Iowa, Minnesota and Illinois as proof that more renewable energy doesn’t necessarily mean higher bills, though they do concede that there will be some increase in annual payments. The group cites “studies by independent economists” that predict such a move would cost the average household about $15 extra each year, and that it could eventually usher in lower costs.
The proposal’s wording also includes a stipulation that could soften the economic impact. “To protect consumers, compliance with the clean renewable electric energy standard shall not cause rates charged by electricity providers to increase by more than 1% in any year,” reads the proposal. “Annual extensions for meeting the standard may be granted, but only to the extent demonstrated to be necessary for an electricity provider to comply with the foregoing rate limitation.”
From the perspective of the Michigan Chamber of Commerce, the biggest issue is the inflexibility certain to come from a constitutional amendment. This type of issue, they say, is best decided by legislators rather than from inside the voting booth.
"In 2008, Michigan adopted a 'Renewable Portfolio Standard' of 10 percent to be achieved by 2015 as part of an overall state energy policy," said Jim Holcomb, Senior Vice President for the Michigan Chamber, which represents nearly 7,000 employers, trade associations and local chambers of commerce. "Every piece of state energy law is connected and changing one piece can create problems with other parts.
"Unfortunately, during this election season, individuals seeking financial gain are willing to clutter the state constitution instead of pursuing a more thoughtful approach that focuses on the legislative process open to all stakeholders.”