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Different Shade of Green Stalls State Energy Reform

Lawmakers gut efficiency, renewable power mandates and reduce customer choice

July 30, 2008 | By Glenn Puit
Great Lakes Bulletin News Service

  Entrepreneurs say Michigan must require utilities to sell more green power before firms can build wind turbine factories in Michigan similar to this Vestas facility in England.
More than a year after Governor Jennifer M. Granholm endorsed legislation requiring Michigan’s utilities to sell more renewable energy, efforts in the Michigan House of Representatives and Senate to reform and green up Michigan’s power supply—and create thousands of new “green collar” jobs—are at an impasse.

What, if anything, happens next in the state Capitol could determine whether or not Michigan joins dozens of other states and nations in adopting policies that advance renewable energy generation and its jobs-building and planet-cooling possibilities.

Whatever the outcome, however, most clean-energy advocates say that the process so far reveals just how much clout the state’s two largest utilities have with Lansing lawmakers. They point out that the big power providers got what they wanted in the bills each chamber produced—sharp curtailment of so-called “customer choice” rules—while green power entrepreneurs were left with little to cheer about, particularly in the Senate legislation.

The road leading to the current standoff between the state House and Senate over greening up Michigan’s energy began in earnest in March of 2007, soon after Governor Granholm, clean-energy advocates, and green businesses touted mandates that would require utilities to get as much as 20 percent of their electricity from wind turbines, solar panels, and other renewable sources by 2020.

But the energy reform bills that the House passed 13 months later, in April of this year, fell far short of that mark. Although utilities companies seemed pleased with the House package, it drew either tepid reviews or outright condemnations from citizen and industry groups that had stumped for green energy mandates, also known as Renewable Portfolio Standards, or RPS.

Two weeks ago, RPS opponents landed another, stronger blow against green reforms when the Republican-controlled Senate gutted the Democratic-controlled House’s weak package. The upper chamber passed SB 213, and only the language blocking most customers of the state’s two largest utilities from shopping elsewhere for lower rates—which the companies say will help them pay for big new coal or nuclear power plants they want to build—survived in a credible form.

Last week, however, in a move that surprised many, the House flatly rejected SB 213. So, a House-Senate conference committee must try to bridge the gap between the House’s very modest mandates and the Senate bill that gutted them.

“It is the worst piece of supposedly renewable and energy efficiency legislation passed anywhere in the United States,” Anne Woiwode, director of the Sierra Club’s Michigan chapter, said of SB 213. “It doesn’t even include the term ‘energy efficiency’ in it.”

The impasse has some critics wondering why it is taking the Legislature so long to act. They say that enacting RPS and other jobs-rich green energy policy should be relatively easy, given the positive results many states are seeing from their own green energy reforms, and the need to put Michigan’s thousands of idled workers and factories back in action.

The delay, some green energy lobbyists and entrepreneurs say, has much to do with another shade of green: Consumers Power and Detroit Edison, the state’s two largest utilities, are among the heaviest contributors to state lawmakers’ campaign funds. That, critics say, could explain why it seems to them as if the utilities, not elected officials, are writing the state’s energy policies.

The utilities dispute this, saying they are simply exercising their right to be heard on an issue that is critical to their futures. But the entire process, capped by the Senate’s gutting of the House bill, has at least one of the state’s green-power pioneers—who built the state’s second and third utility-sized wind turbines about seven years ago—angry.

“It’s astounding how disgusting this whole thing is,” said Richard VanderVeen, president of renewables energy provider Mackinaw Power L.L.C. “It is remarkably sad and unfortunate. Politics and money have collided to provide a very unsavory piece of legislation.”

Bi-Partisan Blame
When the Senate gutted the House package by passing SB 213, many environmental groups, alternative energy providers, and commentators quickly branded the Senate bill as completely worthless.

A review of this year’s legislative proceedings by the Great Lakes Bulletin News Service, however, shows that Senate Republicans aren’t the only ones to blame for the state’s failure to craft a green energy policy that sparks new industry. Democrats are also part of that failure.

Last year, when House legislators formally proposed that power providers get 13 percent of their electricity from renewable sources by 2013—markedly less than proponents were suggesting, it was still seen by many as a reasonable, positive first step. But as the legislation headed for final House approval, the same advocates were stunned to see the original language suddenly replaced by a new, weaker version that, they said, seemed to appear out of nowhere. That surprise version cut the RPS goal to 10 percent by 2013, and added rules that made opting out of the mandates fairly easy to do.

Hans Detweiler of the American Wind Energy Association lobbied legislators on behalf of RPS; he said the big utilities had by far the most to say about the House of Representatives’ renewable energy legislation.

“The [House legislation] was clearly written by the utilities,” said Mr. Detweiler. “When they [legislators] were negotiating questions on the House bill, [the utilities’] representatives were in there talking to the legislators.”

Mr. Detweiler added that, in contrast, even when he spoke to legislators on behalf of wind power project developers at a House hearing, “they cut me off.”

After it was passed, Mr. Detweiler’s wind association protested that the House legislation was “inadequate.” He penned and publicly released letters, signed by seven alternative energy companies eager to set up shop in Michigan, urging Governor Granholm and State Senate Energy Committee and Technology Chairman Bruce Patterson to start over with a brand new set of bills.

Mr. Detweiler pointed out that the final package the House sent to the Senate requires just 4 percent renewable energy over the next seven years, a goal the state already surpasses thanks to its hydroelectric power, before suddenly jumping to 10 percent in the next year, 2015. There is no reason, he said, to wait that long to begin implementing increases in renewable energy.

“This bill intentionally lacks a road map to get to the 10 percent in 2015. If they were serious, they’d set credible goals for growth in 2010, 2011, 2012,” he said, adding that the delay gives wind-energy businesses no incentive to invest in Michigan until then.

“We need to be tripling the amount of manufacturing capacity [for wind turbines] in the country,” Mr. Detweiler said. “What in the world is the argument for waiting seven years to do this? In seven years, all of the new factories are going to be in Ohio.”

From Bad to Worse
Yet environmental groups reluctantly supported the House version, saying it was better than nothing and at least a first step for the state. They added that they hoped the state Senate would do the right thing with the House bill and at least retain its weakened renewable and energy efficiency standards.

Instead, green power advocates say, the Senate made it worse.

SB 213 was passed literally in the dead of night on June 27, the same day that Governor Granholm stumped at the Michigan Energy Fair for RPS, energy efficiency, and other green-power basics. Senators passed the bill sometime after midnight; it severely cut the state’s RPS, counted renewable energy production and reduced energy demand via efficiency measure as the same thing, required that number to add up to just 7 percent of the state’s power supply by late 2015, and removed requirements for the utilities to help their customers take energy efficiency steps.

James Clift, policy director of the Michigan Environmental Council, which supported the House package, explained SB 213’s math.

“It is less than half of what was proposed in the House, and the state is already at 4.6 percent [renewables],” he said. In other words, he added, “The Senate package is embarrassingly weak.”

None of the lawmakers mentioned in this article responded to several requests from the Great Lakes Bulletin News Service for comments. However, State Senator Patricia Birkholz, R-Saugatuck, who sponsored SB 213, defended the legislation in an interview with the Associated Press, claiming the Senate’s reduced renewable portfolio standard would save customers money.

"We're trying to contain the costs, yet move us into the 21st century," Senator Birkholz said.

But criticism of the Senate bill remains fierce; many say the utilities and big industrial power-users had too much influence over the Senate’s actions.

Utilities Green Up Lawmakers
A Great Lakes Bulletin News Service analysis shows DTE and Consumers, which contribute to many Democrats and Republicans in both state chambers and to both parties as a whole, gave Republicans in the Senate large amounts of money. Senator Mike Bishop, R-Oakland County, the Senate majority leader, took $15,700 in campaign contributions from utility interests since 2003.

Senator Birkholz, considered a major player in the Senate legislation, took $29,750 in campaign contributions from power companies. And Senator Bruce Patterson, R-Wayne County, chair of the energy policy and public utilities committee, took a whopping $95,300 in campaign contributions from power companies since 2003.

Additionally, state records indicate that, when it comes to formally lobbying the Legislature, utilities have spent more than $500,000 on lobbying in Lansing, outspending renewable energy providers by three to one.

The utilities say they actually support the 10 percent renewable portfolio standard contained in the House legislation.

“We do agree with the 21st-Century Energy Plan, which said Michigan needs a long-term program to address the increasing need for energy through renewables, energy efficiency, and also new base-load generating plants,” said Dan Bishop, public information director for Consumers, referring to a state-sponsored study that many green power advocates insist is outdated and overstates Michigan’s need for new fossil-fuel sources.

Both Bishop and a spokesman for Detroit Edison, whose parent company recently promised to spend as much as $3 billion developing alternative energy sources, said that campaign contributions are part of the public process, and that lobbying is simply their right to have their voices heard.

“From my perspective, its been a very open and very vigorous debate in Michigan over the last several years,” Mr. Bishop said. “There’s been a lot of commentary from groups all over the board, including environmental groups.”

But Mr. VanDerVeen, of Mackinaw Power, believes Michigan’s environmental groups got “hoodwinked” during the legislative process. He said the groups should have never supported the House legislation’s weakened RPS. Instead, he said, the groups mistakenly believed legislators would eventually do the right thing—install standards that would kick green energy production and component manufacturing in the state into high gear, creating thousands of jobs.

“You can kiss [markets for renewable energy in Michigan] goodbye,” Mr. VanderVeen predicted. “This will turn over all the decisions about who gets what and when to our dear friends at Consumers Energy and Detroit Edison. Then, when they roll out their new coal plants and nuclear plants—and the cost of energy goes through the roof—they will blame renewables.”

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

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