Proposal 3 would put state out front in dash to renewable energy

Oct 7 - McClatchy-Tribune Regional News - Zlati Meyer Detroit Free Press

The campaign ads for Proposal 3 on the Nov. 6 ballot could lead a voter to conclude that its passage would bring Michigan's reliance on renewable energy sources for its power in line with forward-thinking states across the nation.

What they don't say is that it also would make Michigan the only state to put a standard in its constitution or that the requirement to produce 25% of its electricity from renewable sources by 2025 would put Michigan, with a few other states, ahead of the renewable energy bandwagon.

Leaving voters with a tough decision: Is that a good thing?

--PROPOSAL 3: Ballot language, analysis

Michigan has been at the head of the class before on environmental policy. Consider the state's 10-cent bottle deposit law passed in the 1970s. And the state already is among 29 with renewable-energy policies in place, according to the U.S. Department of Energy. Public Act 295, passed in 2008, requires 10% of the state's energy from renewable sources by 2015.

Proponents of Proposal 3 -- a coalition of environmental advocates and businesses that would benefit from the change proposed by those who signed petitions to put it on the ballot -- tout it as a jobs and economic-investment generator that will benefit the environment at minimal cost to ratepayers.

Opponents challenge the economic assumptions and suggest waiting until 2015 to see through the challenge of meeting the less ambitious 10% renewables requirement.

The campaign is well financed on both sides. Proponents are running television ads stressing public-health and environmental benefits and that the requirement could lead to tens of thousands of jobs -- though more than one-third would be temporary construction positions. Meanwhile, utilities have taken the fight directly to ratepayers with e-mails and letters; for example, a letter to shareholders of DTE, which provides electricity and natural gas to 3 million customers in southeast Michigan, recently sent its shareholders a letter that said, "[W]e are concerned that the mandate's $10-to-$12 billion cost will raise (customers') rates faster than they can afford."

Today, the Free Press examines the key Proposal 3 issues:

Constitution change needed?

Michigan Energy Michigan Jobs, the group behind the proposal, says it is pushing for a change to the state constitution, rather than advocating a change in state law, because politicians are beholden to energy companies and big oil and unlikely to agree to a change to increase the state's reliance on renewable-energy. Advocates argue that the constitution has already been amended about 30 times in the past half century.

"DTE and Consumers Energy went kicking and screaming to the currently paltry standard of 10%," said Proposal 3 spokesman Mark Fisk. "This is too important for Lansing politicians to decide. We need to let the people decide."

But, as the Clean Affordable Renewable Energy (CARE) for Michigan Coalition, an anti-Proposal 3 group, pointed out, the current standard -- 10% by 2015 -- was passed by the politicians, who are elected by the people who happen to be ratepayers. The lawmakers the proposal's advocates disparage would have to pass laws to implement the proposed standard and deal with non-compliance issues. They also argue that the renewable energy landscape is evolving as new technology is developed and putting a standard in the constitution would make it difficult to react to those changes.

"The only way to change something in the constitution is you have to go back to the voters, which hypothetically is not impossible, but as a practical matter, it doesn't give you the flexibility you really need for something as complex as energy policy," said Ken Sikkema, senior policy fellow at Public Sector Consultants, which has done Proposal 3 analysis for CARE.

According to Barry Rabe, a professor of public and environmental policy at the University of Michigan, it's not unusual for a state (Texas is one instance.) to change its renewable energy standard before the current one is reached. But other states haven't used their constitutions to mandate such change.

Jobs, investment

Those in favor of Proposal 3 estimates passing this measure will translate into 94,000 jobs; about 10,500 more than a Michigan State University study they like to quote forecasts. The difference is based on the expectation that at least 50% of manufacturing jobs related to the passage of the so-called 25x25 proposal will be in Michigan. The 74,500 new jobs MSU researchers calculated approximately 31,500 construction jobs.

The group also says Proposal 3 will mean $10.3 billion in new investments in the state.

Opponents dispute the jobs number and cite a U.S. Department of Energy study that puts the total number of wind-energy jobs for the entire nation at about the same amount as those proponents predict for just Michigan.

Rabe said the question of job creation in other states has been hotly debated: "In other states, we have tended to see extreme estimates on one side and extreme underestimates on the other side and the reality in between."

He also noted that the MSU study uses the term "job years," which means one job lasting 30 years would be counted as 30, not one.

A report by the nonpartisan Citizens Research Council of Michigan found, "By reducing the dependence on coal, the proposed amendment would reduce the amount of resources paid to other states to purchase coal and would reduce the cost of transporting coal from other states. Money not paid for the purchase or transportation of coal could remain in Michigan to be put to other purposes."

What will it cost?

According to proponents, the average Michigan household will not pay more than $1.25 a month and could even translate into lower energy bills in the long run. The ballot language limits annual electric utility rate increases to 1%.

Opponents say that rate cap isn't guaranteed and that it'll cost individual customers thousands of dollars to cover what they estimate is a $12.5 billion price tag.

"It is ludicrous to think you're going to pay for that with a $1.25 a month," said Sikkema.

And the arithmetic could be wrong anyway, according to the CRC. Analysts for the group concluded the federal government's approximately 30% tax credit for wind turbines is set to expire at the end of this year and there's "considerable uncertainty" in Washington over whether it'll continue.

Then again, the CRC said, "Once renewable energy facilities are in place, the generation of electricity from renewable sources has the potential to temper the increase in electricity prices."

If standard can't be met

Michigan Energy Michigan Jobs says the utilities will have no problem complying with the new standards; a Michigan Public Service Commission report released in February found that all utilities "are expected to be able to meet the 10% renewable energy standard in 2015, with the exception of three."

And the group would stay together to insure none exceed the rate cap or fail to meet the 25x25 standard. If they do, the group would seek relief from the state Public Service Commission or courts.

Fisk said, "We are going to be watching the big energy companies like hawks."

CARE, though, questions why the issue of non-compliance isn't addressed in the proposal.

Environmental impact

Advocates say requiring more renewable energy translates into less pollution and cleaner air and water, which in turn reduces heart and lung disease and asthma. It also means protecting the Great Lakes.

"We're dealing with dinosaurs and Neanderthals who want to keep the status quo and keep us addicted to outdated forms of energy, like oil and coal," Fisk said. "They want to keep Michigan stuck in the past and let us fall behind 30 other states."

Opponents say Michigan's air and water are the cleanest they've been in generations.

"I don't believe you have to choose between clean air and water and the economy. In a manufacturing state like Michigan, I think you can have both," Sikkema said.

Small providers

Proposal 3 advocates say the language is flexible to provide what Fisk called "an off-ramp" for the little guys, such as municipal utilities and electricity cooperatives, which need to delay implementation.

Opponents, like Sikkema, disagree, calling it "a tremendous burden" on these providers.

The CRC called the ability of smaller energy companies to meet the 25% standards "questionable," adding, "The potential premium charged for that energy will threaten the financial position of these entities, and may in the end threaten their existence."

Placing wind farms

Michigan Energy Michigan Jobs' Fisk expects "zero" problems finding places to locate wind turbines.

CARE and Rabe anticipate resistance from communities. The whirring of wind turbines is a permanent change to the environment of rural communities. On the Canadian side of the south end of Lake St. Clair, large numbers of wind turbines have permanently changed the natural look of the lake, for example. Also, CARE fears wind farms could be built in the Great Lakes; Fisk responded that Michigan could meet the 25% standard using just 6% of its on-land wind capacity.

"It's not fair to ask voters to amend the constitution, lock in what would be another 3,000 windmills without telling people where they're going to go," said Sikkema.

Added the CRC, "The areas of Michigan that have few inhabitants are generally forests, which are not ideal locations for windmills. Very few areas that are not forests have large amounts of open space similar to the large commercial farms found in the plains states."

Contact Zlati Meyer: 313-223-4439 or zmeyer@freepress.com