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Political slugfest in Mich. over renewable energy ballot proposal

The idea of raising renewable standards may not be a focus on Capitol Hill, but in Michigan, the concept is spurring an expensive political brawl with repercussions for the Midwest's future power mix and manufacturing base.

A proposal on the state ballot that would raise the state's renewable energy standard to 25 percent by 2025 is pitting utilities, chambers of commerce and their allies against environmentalists, public health advocates, faith groups and national organizations from as far away as San Francisco. Supporters say the measure will generate a wind energy surge and jump-start the state's economy, while opponents argue the plan will cause costs to spiral, ruin the landscape and create mass regulatory confusion.

The outcome could influence everything from coal transport through the Midwest to wind-siting regulations near the Great Lakes, analysts say. Passage of the ballot proposal also would set a national precedent, with legal ramifications. It would make Michigan the first state to bypass its Legislature via a well-funded ballot campaign and enact renewable standards through a constitutional amendment approved by voters.

With poll numbers showing the initiative could pass, both sides plan heavy advertising in coming weeks, replete with competing numbers about the cost to electricity.

"The very idea of not only pursuing a major expansion [of renewable power] but doing it via the route of constitutional amendment makes this a very important test case," said Barry Rabe, a public policy professor at the University of Michigan.

J.R. Tolbert, executive director of the National Caucus of Environmental Legislators, said Michigan is notable because its ballot measure comes at a time when some states are considering bills that would freeze or roll back existing renewable standards. Many of those half-dozen or so measures introduced this year were backed by conservative organizations like the Heartland Institute and American Legislative Exchange Council, he said.

Legal challenges in other states

Delaware, for example, rejected a bill in committee this year that would have frozen its renewable standards. A similar bill was recently introduced in Wisconsin for the 2013 session. "We would not be surprised if [conservative groups] don't try four or five other states," Tolbert said.

He didn't expect the bills to pass, he said, but they indicate the policy challenges of the current environment.

One Midwestern analyst said he was heavily lobbied to support the Michigan plan by national organizations that clearly wanted to make the state a case study on whether advocates could find a way around an "unfavorable" state legislature.

A coalition group, Michigan Energy Michigan Jobs, spearheaded the campaign to get the proposal on the ballot with more than 520,000 signatures and $2 million in funding help, including from national environmental groups like the NRDC Action Fund in New York and the Green Tech Action Fund in San Francisco, according to state campaign finance documents.

Michigan currently gets 3.6 percent of its power from renewables. Its existing portfolio standard requires utilities to generate 10 percent of their retail sales from renewable sources by 2015.

The Michigan Public Service Commission reported in February that the state is on track to meet that requirement, largely because of a surge in wind installments. Currently, Michigan gets more than half its electricity from imported coal, a dynamic helped by the state's peninsular geography and lack of mining areas.

In addition to raising the standard to 25 percent by 2025, the ballot proposal would require that new renewable energy be located within Michigan or the customer service territories of Michigan utilities. It mentions four sources -- wind, solar, biomass and hydropower -- as those that "naturally replenish over a human rather than geological time frame."

The proposal aims to keep costs in check by setting a cap. If the increased standard causes electricity rates to rise more than 1 percent in any year, extensions could be granted to utilities.

Utilities man battle stations

The state's two main utilities, DTE Energy and Consumers Energy, have poured more than $2 million each into an umbrella group opposing the measure -- the Care for Michigan Coalition -- state finance documents show.

In the coalition's view, the measure would cost at least $12 billion and lead to more than 3,000 turbines larger than the state Capitol spread over an area six times the size of Detroit. Some of their statistics come from a utility-backed study released by a former Republican Senate majority leader in July.

The idea of enshrining a renewable standard in the constitution will create a regulatory mess, by making it nearly impossible to change the standard if necessary, opponents say. "This will go to court if it passes," said Alejandro Bodipo-Memba, a spokesman for DTE Energy. A constitutional amendment can be altered, but it is not as simple as standard legislative bills.

The permanence of a constitutional amendment will make it difficult for utilities to adapt to new technologies such as clean coal, opponents say. The language in the proposal is "perilously vague" on whether the four resources mentioned -- wind, solar, biomass and hydropower -- are the only ones that could meet the standard, according to the coalition.

Bodipo-Memba said the idea of holding costs to 1 percent annually would be "extremely difficult," particularly in a state that has electricity rates higher than the national average. Supporters of the measure say there is enough inland wind by far to meet a 25 percent standard, but Bodipo-Memba said offshore wind in the Great Lakes "would have to be part of the discussion."

But Mark Fisk, a spokesman for Michigan Energy Michigan Jobs, said the coalition and utilities are engaging in scare tactics.

"The utilities went kicking and screaming to the current renewable energy standard. Now they support it," Fisk said.

This is another case of utility money trying to raise false red flags about electricity prices to protect coal, he added. He said he was extremely proud of the broad range of financial donors to his group -- including ones from out of state -- that helped level the money playing field with utilities.

UAW likes jobs that can't be outsourced

A report from Michigan State University prepared for an environmental group found that the proposal would bring in $10.3 billion in new investment and create at least 74,000 "job years," a measurement of annual employment for one person. Fisk said his group heard from many renewable entrepreneurs who say they need more long-term investment certainty than that provided by the existing standard of 2015, Fisk said.

The state's current 3.6 percent generation from renewables is far below the rate in Midwestern states like Iowa, which gets 19 percent of its power from wind, he said. Many other Midwestern states already have a 25 percent renewable mandate, putting Michigan's manufacturing base at a disadvantage, he said.

The 4,600 megawatts of renewable energy Michigan needs to meet the standard is modest -- one-twelfth the amount of land-based wind potential, according to Fisk. It is clear that the ballot provision builds on the existing rules -- which include resources like geothermal and landfill gas -- and doesn't exclude those power sources from meeting a revised standard in the future, he said.

In its endorsement, the United Auto Workers said the initiative would create thousands of jobs that could not be outsourced.

Bodipo-Memba of DTE Energy said it is irrelevant that Michigan's standard is lower than some nearby states'. Ohio can count resources such as coal-bed methane in its standard that are not allowed in Michigan, he said.

An independent analysis released in September from the Citizens Research Council of Michigan, a research group, provides fodder for both sides.

The proposal would reduce the state's cash transfers to other states to produce and transport coal, it found. All of the state's coal supply is imported, with most coming from the Powder River Basin in Wyoming and Montana. The state government estimates this import cost is roughly $1.39 billion annually.

"Money not paid for the transportation of coal could remain in Michigan to be put to other purposes," the council said.

'Inflammatory public meetings'

The ballot provision also could help state manufacturers of turbines and solar panels and boost the export market, according to the council. Its report said that of the 29 states with renewable standards, Michigan's are among the "least aggressive."

Yet the siting of windmills in Michigan is more difficult than in Plains states, considering that most of the areas in Michigan with few inhabitants are forests, the analysis notes.

Residents in rural areas have halted some wind farms after loud protests. The backlash in these rural areas with high wind potential indicates the state may need to supersede local authority for the zoning of windmills if the proposal passes, the analysis said.

"There have been a lot of inflammatory public meetings over wind," said the University of Michigan's Rabe, who did not participate in the report and does not have an official stance on the ballot measure.

As of July, the state had 487 MW of wind online, an amount that could surge to more than 4,000 MW with the ballot proposal, according to the American Wind Energy Association.

Additionally, the Citizens Research Council raised concerns about how the proposal would be enforced, considering it would be enshrined in the state constitution.

"Would the courts issue a writ of mandamus to compel an electricity utility to generate more energy?" its report asked.

The 1 percent annual rate increase cap also "promises to create challenges," the council said.

It needs to be clarified whether that includes just facilities used to generate renewable energy, such as solar panels, or also costs related to electrical transmission of power. "Should those costs appear as a separate line item on consumers' bills?" the council asked.

There is further speculation that the proposal would create a dynamic where renewable power is imported from states such as Wisconsin that are included in the customer service territories of Michigan-based utilities.

Governor sees higher electric bills

This is being billed as a "made in Michigan" bill for renewables, but it's not entirely clear how the "customer service area" part of the proposal would play out, Rabe said.

Some industry leaders, though, have said a stronger set of renewable standards would fortify the state's electrical grid by allowing stronger connections to neighboring states (ClimateWire, March 9).

Fisk said that the customer service area is a necessary flexibility for utilities that straddle the border but maintained that 95 percent of the renewable facilities would be in Michigan.

Michigan Gov. Rick Snyder (R) released a critical statement saying the proposal "would cost billions to implement, raise electric bills and make Michigan businesses less competitive."

The governor's words could sway some people, but labor unions could be a bigger factor because of a separate collective bargaining measure on the ballot, Rabe said.

The state's labor unions are split -- many large groups, such as the United Auto Workers and Service Employees International Union, support the measure, while some labor groups representing coal and construction workers stand in opposition and have been pushing the state Democratic Party to withhold an endorsement.

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