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House Green Energy Package Raises Questions

Last minute changes, Senate doubts threaten jobs-boosting bill

May 22, 2008 | By Glenn Puit
and Marcello Betti
Great Lakes Bulletin News Service

Michigan Student Sustainability Coalition
  Although more than two dozen other states now require their utilities to use at least some green power, Michigan has yet to enact so called “renewable portfolio standards.”
LANSING—Responding to strong appeals by environmentalists, green entrepreneurs, and Michigan Governor Jennifer M. Granholm, the Michigan House of Representatives passed a package of bills last month meant to accelerate the growth of a clean-energy industry in this jobs-starved state.

But the package, which was amended during last-minute lobbying by the state’s electric utilities, some of their industrial customers, and the state business chamber, may be in trouble as it heads to the state Senate.

Most environmental groups that pushed for the multi-bill package said it is an important first step toward developing renewable energy sources and a green manufacturing sector in Michigan. But seven clean-energy companies, who also lobbied hard, say that the final bills are almost useless when compared to similar legislation passed by two-dozen other states intent on attracting green investment. And others say the bill is slanted against residential ratepayers.

Some renewable energy advocates worry that, given the strong criticism the package is attracting, how long it took the House to pass it, and the Senate’s apparent doubts about renewable energy as a jobs-builder, lawmakers may fail to enact energy legislation this session. That, advocates warn, would mean that the state would miss out on more of the significant economic opportunities offered by the worldwide shift to a clean-energy economy that is now underway in response to the threat of global warming.

More than two dozen other states already have installed new policies to encourage green economic growth. Michigan has not, even though it has the nation’s highest unemployment rate and is struggling to rebuild its shattered manufacturing base. In fact, clean energy advocates who support the House package say that the Granholm administration is moving in the opposite direction: The state is on the verge of allowing at least five energy companies to build new coal-fired power plants in the state, which could make it more difficult to attract clean-energy investment dollars.

Proponents of the House package, including clean-energy advocates, most utility companies, the governor, and lawmakers from both parties, are urging the state Senate to improve and enact the package. They say that three provisions—mandates for more renewable energy, reducing energy consumption, and proving the need for any new, fuel-burning power plants before they are built]—would begin shifting Michigan away from costly, fossil fuel-fired plants and toward renewable energy, and help the state grow new green energy and green manufacturing sectors.

“I think everyone realizes that this is going to lead to jobs, and this is a good deal for Michigan,” said James Clift, policy director for the Michigan Environmental Council.

But the state Senate seems unconvinced: In early April, it passed a bill far less ambitious than the House package. For example, while the House requires all energy companies to draw 10 percent of their electricity from renewable sources such as wind, solar, or hydroelectric by 2015, the Senate bill requires only that the state government do so.

“The Senate holds the state’s energy future in their hands,” said Gayle Miller, legislative director of the Mackinac Chapter of the Sierra Club, based in Lansing. “They can launch Michigan into a clean energy future, or they can destroy Michigan’s best opportunity for new economic development.”

In the past few days, proponents of the House package have sent Senate leaders a string of proposed changes to the legislation that they say would improve it.

Special Interests
Some critics of the House bills say that it took so long to pass the modest package because of the clout of Lansing’s utility and business lobbyists.

According to a recent article by The Associated Press, the state’s top two electric utilities, DTE Energy and Consumers Energy, who together supply almost 90 percent of Michigan’s electricity, spent at least $525,600 last year lobbying the Michigan Legislature and the Granholm administration.

That is three times what their alternative energy competitors spent, and puts each company in the top 20 list of Lansing lobbying efforts. AP also reported that DTE gave $184,300 directly to lawmakers, their legislative campaign committees, Governor Granholm, and other statewide elected officials, while Consumers gave $71,500.

According to the AP, alternative energy companies spent about $176,500 on similar lobbying activities that year, and barely contributed at all to gubernatorial or legislative campaigns.

The heavy lobbying and large campaign donations by DTE and Consumers, observers say, may explain why House leaders were willing to tie mandates for renewable energy and energy efficiency to a bill that would prevent most of those firms’ customers from seeking lower rates elsewhere. That would assure the two companies a solid customer base to finance costly new coal or nuclear plants. Governor Granholm, whom the AP said received $10,000 from DTE last year, supports the tie.

Critics of the tie say it makes little sense, however, because it could slow down green power’s growth by helping the two big companies build big, new, fuel-burning power plants. But, they observed, it might make sense considering the extensive campaign contributions that Republicans and Democrats representatives who worked on the package have received from DTE and Consumers.

Frank Accavitti, a Macomb County Democrat who, as chair of the House Energy and Technology Committee, helped hammer out the package, received campaign contributions from several utilities. During the 2006 election cycle Representative Acavetti’s political action committee received $2,550 from DTE Energy’s political action committee and $1,900 from CMS Energy, Consumers’ parent company. The following year, his PAC received another $1,600 from DTE and $1,800 from CMS.

Representative Accavitti also received $1,000 from Michigan A.C.R.E., an electric cooperative PAC, and $500 from the Constellation Energy Group.

Mike Nofs, the Calhoun County Republican who is vice-chair of the energy committee, also took at least $1,000 from Michigan A.C.R.E. in 2007, as well as $3,400 from DTE’s PAC and $2,000 from an employee PAC organized by CMS.

Neither representative responded to requests for comment for this story. House Speaker Andy Dillon, a Wayne County Democrat, who received $10,000 from Edison and $2,000 from Consumers in 2007, responded by issuing the following statement:

“The decision to tie bar these bills was a mutual one from the bipartisan energy workgroup in the House. As the legislation was bipartisan, so were those decisions.”

Dave Waymire, a spokesman for the Customer Choice Coalition, a Lansing-based, pro-business lobby that is trying to stop lawmakers from eliminating customer choice in exchange for progress on green energy, says the deal will costs lots of electricity customers—particularly Edison’s and Consumers’ residential ratepayers, who, analysts say, are most affected by the House package as it is currently written.

Mr. Waymire also said that the utilities’ political contributions strongly influence the energy debate.

“Everybody in town knows what’s going on,” Mr. Waymire, whose group spent just $17,700 on Lansing lobbying last year, said.

‘We Want to Be Involved’
A spokesman for Consumers and CMS said that campaign contributions are a legitimate way to make sure his company is heard in Lansing.

“My initial take on that is if we had all this power and clout, the legislation would have been done last year,” said spokesman Jeff Holyfield. “We want to be involved in that process, and we have a right to be heard.”

DTE spokesman Scott Simons agreed.

“We are a part of everyone’s life and we provide a service and product people can’t do without,” Mr. Simons said.

But the spokesmen for CMS, which is proposing a new coal plant in Bay City, and for DTE, which may be considering building a new nuclear power plant, also said that their companies support renewable energies. They indicated that their companies would invest as much as $6 billion to meet the House package’s requirement that all energy companies in Michigan obtain at least 10 percent of their power from renewable sources by 2015.

“We believe the package of bills, taken as a whole, offers a path to a clean, affordable and reliable energy future for Michigan,” said Mr. Simons. “This package, if adopted, would increase energy efficiency in Michigan, expand renewables, and it would assure construction of new power plants in the state.”

Both spokesmen said that focusing solely on renewables would not meet what they claim will be a growing demand for energy in Michigan.

“Renewables are only the part of the solution,” Mr. Holyfield said. “We need a policy that looks at 100 percent. It’s like having a car with four bad tires and you buy one and say, ‘Okay, I’ve fixed the problem.’ Well, you haven’t.”

A Step Forward?
The Michigan Chamber of Commerce and the Michigan Manufacturers Association also strongly influenced two provisions that ended up in the final House package.

One caps the amount utilities have to spend to meet the new, 10 percent renewable energy mandate. The groups wanted to limit how much Michigan firms would have to pay in higher rates to finance renewable projects, and shift more of that cost to residential customers, even though industry consumes most of Michigan’s electricity.

The other provision would charge a flat fee to all customers for the cost of going green—a move that also favors heavy power users. Neither of these provisions was included in the renewable energy legislation originally proposed in the House.

The Sierra Club’s Ms. Miller said one important part of the House package is “integrated resource planning,” which she said is crucial to a rational energy policy. She explained that power companies would “have to prove that they must use new, polluting power sources because they can not generate that same amount of needed energy through additional investments in renewables, energy efficiency, and load management.”

Like Ms. Miller, most other environmental lobbyists in Lansing say that the House package deserves Senate support.

“Clearly we can do better, but it is a first good effort,” said Mr. Clift of the Michigan Environmental Council. “It might take them a little while, but I do think the Senate will pass an energy package.”

Greg White, the legislative liaison for the Michigan Public Service Commission, which regulates most utilities in the state, said compromise is essential to moving energy legislation forward.

“This gets us a program that we don’t currently have,” Mr. White said. “If you lost support of the business community and part of the Legislature, then you could end up with nothing.”

Glenn Puit, a veteran investigative reporter, is the Michigan Land Use Institute’s Emmet County policy specialist. Reach him at glenn@mlui.org

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