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Granholm Firm on Vetting Coal Rush

But lawmakers’ petition, Cox opinion reflect utilities clout

April 6, 2009 | By Glenn Puit
and Jim Dulzo
Great Lakes Bulletin News Service

  Governor Granholm, several state lawmakers, and Dowding Industries officials announce plans to hire 350 workers to build wind turbine parts at a new factory in Eaton Rapids.
LANSING—Six weeks after Democratic Governor Jennifer Granholm unveiled her aggressive plan to create tens of thousands of clean-energy jobs in Michigan, dozens of state lawmakers petitioned her to withdraw one of its key elements—her order for a closer look at Michigan’s coal rush, a push by utilities to build up to seven new coal-fired power plants in the state.

Governor Granholm’s directive, announced during her Feb. 3 State of the State address, ordered two state agencies to determine whether the utilities proposing new coal plants actually need the additional power, and, if so, whether they were using the most “feasible and prudent” means to generate it.

But some lawmakers have since rebelled, sending a petition letter to the governor. The letter, written by House Minority Leader Kevin Elsenheimer, a Republican, and Speaker of the House Andy Dillon, a Democrat, was signed by 72 House members. It followed an unsuccessful attempt by State Attorney General Mike Cox to overturn the Granholm directive on legal grounds.

The lawmakers, however, took a different tack: Calling the governor’s coal directive a “moratorium” on new coal plants, they asked her to withdraw it, warning that it would have serious economic consequences.

“By delaying the permitting process for construction of new base-load power plants, the state is in a sense reneging on the promise of thousands of new construction jobs for Michigan residents,” their letter stated. “While the stated motivation may be admirable, we feel that the urgent need to create jobs in Michigan trumps most all other priorities during this time of economic crisis.”

Five Lansing-based citizen groups that oppose new coal plants quickly wrote their own letter to the lawmakers sharply rejecting that claim. They asserted, as many studies have found, that clean-energy plans similar to the governor’s are far more fertile ground for growing new jobs than building new, unneeded coal plants.

“Currently, the largest construction projects in the state are related to clean energy, with thousands of workers expanding Michigan businesses and a revitalizing our manufacturing base,” the groups said. “Rushing to a decision to build new base-load coal at this time is short-sighted.”

The clash over the governor’s coal-plant directive, which Mr. Cox and lawmakers may be powerless to stop, comes as the drive to build more than 150 coal plants in the U.S. continues to fall apart. Over the past 30 months, dozens of utilities have cancelled such proposals,often citing soaring construction and fuel costs.

But the strong pushback to the governor’s directive, particularly from Mr. Dillon, a top leader of the governor’s party, and from Mr. Cox, who is expected to run for governor as a Republican in 2010, also reflects the clout that Michigan utilities, which spend heavily on legislative lobbying and campaign contributions, wield in Lansing.

Ms. Granholm, however, shows no signs of backing down on what she sees as the best route to reviving the state’s economy—cutting energy costs and creating new jobs through energy efficiency, accelerating the growth of the state’s green manufacturing sector, and moving away from fossil fuels and toward renewable sources for making electricity.

Last week the Michigan Department of Environmental Quality and the Michigan Public Service Commission announced their joint plan for acting on her coal directive. The governor told the Great Lakes Bulletin News Service that the MPSC is moving quickly to facilitate the big shift toward energy efficiency that the governor announced.

Obstructed View
The jobs issue was not the only point in the petition letter that the five groups contested. The groups—the Michigan Environmental Council, Clean Water Action, the Michigan Chapter of the Sierra Club, the Ecology Center, and the League of Conservation Voters—also rejected the petition’s claim that, by looking more closely at the coal plants, the governor was violating the “hand-in-hand” spirit that guided energy reforms enacted last fall.

The groups pointed toSection 6s (4) (d) of the legislation, now enrolled as Public Act 286 of 2008, which requires utilities to examine other “reasonable and prudent” options, such as energy efficiency, before building a new coal plant.

Mr. Cox’s ruling attracted even stronger criticism for its apparent ignorance of PA 286. Several attorneys interviewed for this article said they were baffled by his claim that the governor’s directive was illegal because it did not use language contained in the state’s longstanding Natural Resources and Environmental Protection Act.

Noah Hall, a law professor at Wayne State University, is one of them. He said he does not see how Mr. Cox reached his conclusion and that it was deeply “flawed” on multiple levels, and added that it plainly catered to the power industry, a leading political donor to both Republicans and Democratic lawmakers.

“I think what the attorney general was attempting to do with the opinion was to present an argument on behalf of coal interests, as well as taking a political shot at the governor,” he said of Mr. Cox, a Republican expected to run for governor in 2010. “It’s not at all clear whether the attorney general is acting as an objective legal adviser to the state or advocating for his policy and political interests. It’s harsh, but there’s no other way to look at it.”

Coal and Money to Burn
A news service investigation of political contributions by the state’s two top utilities to both Mr. Dillon and Mr. Cox reveal that both have received sizeable campaign contributions from the firms.

Mr. Dillon, the top House Democrat, has received regular campaign contributions from utilities for years. But in just a six-month span in the latter half of 2008, he received 92 different, individual campaign contributions from DTE Energy executives, lawyers, and managers. The contributions to Speaker Dillon’s Leadership Fund totaled more than $28,000, and the DTE contributions to him were so frequent that they dominated his campaign reporting records for that period.

During that time the Legislature passed green-energy standards that some advocates said were too weak, but an important first step. It also virtually eliminated customer choice for DTE and Consumers ratepayers—a move the firms said was necessary in order to finance the big new power plants that they want to build.

The news service investigation also seems to raise questions about the attorney general’s objectivity regarding the governor’s coal directive. Four months prior to declaring it illegal, Mr. Cox’s political action committee, the 5200 Club, accepted thousands of dollars from Consumers Energy and DTE Energy Company.

A review of hundreds of pages of campaign contribution documents revealed at least $41,000 in direct campaign contributions from those entities to the Mike Cox for Attorney General fund since 2004. The entities also contributed at least $32,800 to Mr. Cox’s 5200 Club during the same timeframe. Another financial report indicates DTE also spent more than $700 to pay for catering at one of Cox’s political fundraisers, which featured several campaign contributions from DTE executives.

Observers note that, if the attorney general’s opinion had stuck, it would have directly aided Consumers’ drive to build a 930 MW coal plant near Bay City. It could have also eventually helped DTE’s drive, announced last fall immediately after lawmakers eliminated customer choice, to build an even larger nuclear plant near Monroe.

According to filings with the Secretary of State, Consumers contributed $2,500 to Cox’s committee on October 23, 2008. DTE gave $3,000 to his committee around the same time.

The attorney general, however, did not mention these contributions when he issued his opinion. And both are part of a long, well-documented pattern of campaign contributions to the attorney general from utilities and other energy interests that, since 2004, total at least $74,000.

The same utilities also spent hundreds of thousands of dollars lobbying other Michigan lawmakers, many of whom signed the petition to Ms. Granholm, at a time when the legislative debate on energy policy was at a peak.

More broadly, the non-profit Michigan Campaign Finance Network, based in Lansing, reported that, together, Consumers and DTE gave Michigan lawmakers and their political action committees $366,000 from 2007-08, making them, respectively, 13th and 19th on the list of the top 200 Michigan lobbyists for 2007.

“All of this matters because interest groups that spend money in politics are rational economic actors,” the Network reported. “They don’t spend their money for selfless or altruistic reasons. They are making investments and seeking a return on their investments. Since the health of Michigan’s people, environment, and economy for years or decades to come is at stake, we should be able to know the details of who is pushing for what, and how hard they are pushing.”

Neither Mr. Cox nor Mr. Dillon responded to requests for interviews for this story.

Full Speed Ahead?
Meanwhile, green energy advocates in Lansing hope the governor stands by her coal-plant directive. They plainly are thrilled that the governor is using the MPSC’s regulatory powers to move the state well beyond P.A. 286’s measures to green jobs-producing policies that are among the country’s most comprehensive.

The MDEQ has asked the five companies whose coal plant permits are pending with the state to compare the cost of their projects with other options, including renewable energy and energy efficiency measures, according to agency Director Steve Chester.

“The DEQ will be moving the permitting process forward in a manner consistent with both Governor Granholm’s executive directive and applicable law,” said Mr. Chester.

He added that the department is seeking guidance from the U.S. Environmental Protection Agency to determine how recent rulings by its appeals board affect Michigan’s pending applications. The MDEQ is also looking to the EPA to give direction on any potential greenhouse gas regulations that may be under consideration.

The Michigan Sierra Club’s Anne Woiwode said she welcomes the analysis that the coal plant proposals are now facing, and said she is not surprised at how hard they companies and their Lansing allies are pushing back against it.

“The governor’s recent executive directive requires that proposed coal plants compete—on cost and on protection of public health and the environment—against other alternatives like efficiency programs and renewable power,” Ms. Woiwode said. “Since coal plants won’t win in a competitive marketplace, they and their backers are desperate to maintain the near-monopoly they’ve enjoyed for more than a century.”

James Clift, of the Michigan Environmental Council, said it is high time the state’s policymakers, lawmakers, and utilities look to the future, not the past, to meet the state’s energy needs—and create more jobs.

“As a state, we need to move forward toward considering renewable energy and efficiency programs, not stand still with century-old coal technology,” Mr. Clift said.

Glenn Puit, a veteran investigative reporter, is a Michigan Land Use Institute policy specialist. Reach him at glenn@mlui.org. Jim Dulzo is the Institute’s managing editor; reach him at jimdulzo@mlui.org. Special thanks to Claire Otwell for additional research.

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