President's Column: Don't believe the naysayers
Michigan’s utility companies are pouring millions into an expensive political ad campaign to confuse the voters on the renewable energy ballot initiative, Proposal 3. The proposal would raise our renewable electricity standard to 25 percent by 2025.
There are plenty of great reasons to support Proposal 3 included in this edition’s special report. But it also is instructive to look at the most prevalent arguments against the ballot proposal and see why you shouldn’t believe the naysayers.
1. It doesn’t belong in the constitution
The state constitution is a whole different creature than our federal constitution. The drafters of our state constitution set a lower standard to amend the document than our federal constitution. The right to amend our constitution has existed in Michigan since 1908, and our current constitution adopted in 1963 has been amended 31 times.
Michigan voters seem to know what they are doing, having repeatedly used their authority to both approve (31 times) and reject (37 times) constitutional amendments. They have set sales and property tax policy, raised the drinking age, established crime victim rights, forbidden same-sex marriage and affirmative action, authorized stem cell research and set restrictions on gambling. It is a very fluid document that has changed with the times, and establishing public policy has been at the core of those changes.
Want to talk about inflexible? A new coal plant would lock us into importing coal for the next half-century. Ten years of renewable energy build out is a relatively conservative plan compared to an inflexible 50-year coal plant commitment.
The first eight words of Michigan’s constitution may state it best: “All political power is inherent in the public.” There is no purer form of democracy than letting the voters decide.
Some constitutional amendments approved by Michigan voters:
1974: Sales tax exemption for groceries and prescription drugs
1978: Capped property taxes and the collection of sales tax (Headlee)
1980: Raised the drinking age from 18 to 21
1984: Created the Natural Resource Trust Fund
1988: Established crime victim rights
1992: Instituted term limits for state officials
1992: Instituted term limits for state officials
1994: Eliminated property taxes for schools and increased the sales tax
2004: Banned same-sex marriages
2004: Bans new gambling with a vote of the people
2006: Banned affirmative action
2008: Authorized stem cell research
2. It’s too expensive
The Michigan Public Service Commission in its February 2012 report on Michigan’s renewable energy standard found that renewable electricity cost about half as much as power from a new coal-fired power plant. The report noted that the cost of renewable energy was falling. The last contracts approved by the commission were in the range of $60-$65 per megawatt hour (MWh) compared to $133 for a new coal plant’s power. The renewable cost is a guaranteed price for 20 years and not subject to the price fluctuations inherent in coal-based energy.
The ballot language restricts the cost associated with meeting the renewable energy standard to no more than 1 percent in any year. That is no more than $1.25 a month for the average Michigan household, and we believe that number will actually be much less—closer to 50 cents.
The State of Illinois has a 25 percent by 2025 renewable energy standard and has reported the measure has reduced electricity costs by $176 million.
What’s more, the cost of coal continues to climb. In Michigan, we import 100% of our coal at an annual cost of $1.5 billion. The price of coal has increased by 71% over the last four years, mostly due to the higher cost of diesel fuel required to transport it. The fuel cost for renewable energy is zero. The wind and sun don’t charge for fuel or delivery.
Even Consumers Energy President and CEO John Russell agrees. In September, he stated: “Our company believes in renewable energy. It is clean, reliable and affordable for Michigan.”
3. It’s unreliable (the wind doesn’t always blow....)
Iowa has reached 23 percent renewable electricity generation and has not had a problem with reliability. Michigan’s energy feeds into a regional grid, which dispatches the electricity where it’s needed, and the grid is a mix of different energy sources, so it’s very resilient. It can absorb Michigan’s 25 percent, much as it has absorbed Iowa’s 23 percent without any significant problems.
The 25-percent level can be met with current technology and does not require any additional investment in storage technology. The other 75 percent of our electricity will be from traditional fuel sources like coal, natural gas and nuclear—whatever makes the most sense. The 25 x 25 ballot proposal will help to balance our energy portfolio and help to smooth out fossil fuel price spikes.
Analysts believe that we need less than 10 percent of Michigan’s on-shore wind capacity to meet the 25 percent. Additionally, today’s modern turbines are 50 percent more efficient than earlier versions used in Michigan, and getting even better.
The cost for solar energy continues to decline and is expected to become cost effective during the last five years of the renewable energy standard. Michigan has more solar capacity than Germany, which set a solar power generation world record this spring with 22 gigawatts produced at midday May 25 and May 26.
4. It’s government overreach (let the free market work)
Our utility companies are state-granted monopolies that accept state oversight in exchange for their monopoly status. The free market does not operate in this sector of our economy, except in a limited way, to avoid the over building of capacity, ensure reliability and to prevent over charging for energy in Michigan.
If left to their own devices, Michigan lawmakers would have no renewable energy policy at all in two short years.
During my tenure as a state representative, I introduced the three pieces of legislation that would have set a renewable energy standard (RES)—in 2002, 2003 and again in 2005. These bills were not even given a hearing because “the utilities are not in support of these bills.” The utility companies only agreed to RES in 2008 when it was merged with the reinstitution of their virtual monopoly status.
When asked this summer what their goals or vision for renewable energy were after 2015, when the current RES runs out, they said point blank that they don’t have one. Ten percent by 2015 was all they were planning to meet, without a change in public policy.
We believe that we need to plan for our energy future beyond the next 24 months. Neither the legislature nor the governor has stepped up to the plate. And our utility companies don’t want to hear it.
Now the people have their chance. We support Proposal 3 because it is smart public policy, protects ratepayers against price shocks, provides good jobs in a growing industry, and keeps Michigan’s air and water healthier.
We hope you’ll join us!
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