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  • Michigan's Rejection of Renewable Energy Mandate Avoids Higher Costs

    Michigan voters rejected a proposed state constitutional amendment last week that would have imposed a mandate requiring the state’s utilities to source 25 percent of their electric sales annually from renewable energy by 2025.

    Proposal 3, dubbed “25 by 25,” called for more renewable energy from wind, solar, biomass, and hydropower, while setting price caps to control expected rate increases caused by compliance with the new standard.

    The amendment would have exceeded current renewable energy standards imposed by the state. Michigan currently seeks to reach 10 percent renewable energy by 2015, due to a law passed in 2008.

    The overwhelming defeat came despite millions from an out-of-state ballot committee Michigan Energy Michigan Jobs (MEMJ) that was opposed by in-state utilities, as Scribe’s Lachlan Markay wrote in the Washington Examiner:

    Of the $11.1 million MEMJ has collected in 2012, about 85 percent has come from major environmental advocacy groups, including, in order of magnitude, the League of Conservation Voters, the Green Tech Action Fund, the BlueGreen Alliance, the American Wind Energy Association, the Natural Resources Defense Council, the Environmental Law and Policy Center, the Environmental Defense Action Fund, the Regeneration Project and the Union of Concerned Scientists. The only individual donor to give MEMJ more than $1,000 is millionaireNew Yorkhedge fund manager Julian Robertson, who gave $1 million…

    Michiganutilities DTE Energy and CMS Energy (directly and through subsidiary Consumers Energy) are providing about 95 percent of the $25 million in funding on the other side, through a ballot committee called the Clean Affordable Renewable Energy for Michigan Coalition.

    Regardless of the massive one-time expense by both parties, the mandate’s continuing expense on individuals and businesses was a key reason Michiganders turned Prop 3 down 63 percent to 37 percent.

    The Heritage Foundation’s Katie Tubb examined some of the impending costs of the amendment’s passage, which aside from being rash energy policy functions as a giant energy tax:

    Nearly every service and product depends on electricity and when prices go up it affects the entire economy. Though the magnitude of net economic impacts differ [across studies], the direction is clear: mandating specific energy sources, rather than introducing efficiency, slows the economy. Electricity prices go up, incomes and employment go down, and the effects of a mandate escalate as the milestones built into the mandate become steeper. As it is,Michigan has over 70 percent of their current mandate to accomplish and yet prices continue to climb. Mandating renewable energy is in effect mandating higher costs and market inefficiency.

    While environmentalists from around the United States hoped Michigan could be the vanguard for a broader national renewable energy policy, Michiganders sent the message loud and clear that costs and benefits matter. America should take notice.

    Posted in Scribe [slideshow_deploy]

    One Response to Michigan's Rejection of Renewable Energy Mandate Avoids Higher Costs

    1. Hugh McDiarmid says:

      Exit polling showed that the opposition was primarily due to voters' discomfort with embedding this policy in the state constitution, not with opposition to renewable energy. That's also a primary reason that four other, unrelated, proposed amendments on the same ballot were defeated by strikingly similar margins.

      As for price, Lachlan Markay's story falsely attributes Michigan's rising electricity costs to the existing renewable energy mandate. There is not a shred of evidence to support this, but plenty of data showing that renewable energy is less costly than than all alternatives with the exceptions of efficiency and, currently, natural gas' historic low prices). In fact, Consumers Energy Co. has — since 2008 — lowered its residential renewable energy surcharge from $2.50/mo to 52 cents, reflecting decreasing costs for wind power.

      By contrast, the non-renewable portion of utility bills have been climbing, attributable to the rising costs of coal which fuels 60% of Michigan's electric generation. Costs of coal delivered to Michigan have doubled in six years and Michigan spends $1.5 billion annually to import it.

      The Michigan Public Service Commission has reported that the RES has had no effect on rates one way or another. It also has found that renewable energy contracts are in the $61 to $64/MWh range, while the cost of comparable coal generation would be between $107 and $133.

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