NEWS

Energy law may jumpstart economy

10/02/2008

MI Live Guest Opinion

Although Michigan still ranks first among the states in unemployment and remains mired in a recession far worse than the rest of the nation, the new energy law passed by the Michigan legislature in September suggests that positive changes are afoot.

The law has been subject to legitimate criticism for the benefits it grants our largest utilities, arguably at the expense of the Michigan consumer. Overall, however, the package will produce net benefits to consumers and businesses alike by facilitating a multibillion-dollar investment and reindustrialization program that could bring in thousands of new, sustainable jobs.

The new energy package offers a three-pronged plan to modernize the industry, by setting "Renewable Portfolio Standards" for energy production, promoting efficiency initiatives, and reregulating the market to allow for necessary capital investments and improvements.

Renewable Portfolio Standards require that a certain percentage of a utility’s power plant capacity comes from renewable sources such as solar, wind, hydroelectric and biomass-based power. More than half of the states across the nation have Renewable Portfolio Standards currently in place.

Michigan’s new law requires a 10 percent mandated RPS by 2015, which is low by some state standards but is conceded by most to be a challenging goal for our biggest electric providers, DTE Energy and Consumers Power. Currently only three percent of Michigan’s electric power is generated by renewable sources.

The law’s efficiency initiatives are aimed at both the industry and the consumer. Under its provisions, utilities will be required to implement energy efficiency programs, construction codes will be updated to promote energy conservation, and consumer tax credits will be available for energy-efficient appliances, windows, insulation, and other products.

It is regulatory changes in the legislation that are the most controversial. The law essentially re-regulates the industry and gives DTE and Consumers Power a guaranteed 90 percent of the electric market, which the utilities insist they need to gain financing for the construction of additional plants to meet the state’s growing energy requirements.

Critics complain that electricity will become more expensive as a result, but supporters counter that without new plants, Michigan would soon be forced to purchase energy on the open market, which would send business out of state and be even more expensive.

There is no doubt the energy package will result in short-term utility cost increases to both residences and businesses across Michigan. But the payoff to the state’s economy is enormous. The alternative energy industry is growing rapidly with the advent of reliable and affordable technologies, especially in harnessing wind energy. Michigan has been identified by the U.S. Department of Energy as one of the top states in the nation for potential wind production.

In addition, studies indicate that Michigan is ideally suited to lead the country in the design, construction and operation of clean energy because of the wealth of our engineering talent, superior tool and die and metal fabrication facilities, and well-developed supplier networks in place for the auto industry.

The energy package has the clear potential to jump-start an economy that has little else going for it in these extraordinarily tenuous financial times. Our lawmakers deserve praise for putting the regulatory structure in place to turn that potential into reality.

Cate McClure is a Michigan-based freelance writer on topics related to law and legal affairs.