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Crain's Detroit Business - 10/23/2006
Debate Heats Up on Renewable Energy
Utilities: Mandates could drive up costs
By Amy Lane
6:00
am, October 23, 2006
LANSING — It’s not a hot-button election issue like
sending jobs to China or failed economic policies.
But renewable energy
has entered into this November’s contests, and it’s about to become a much
bigger debate.
Gathering steam are measures both in the Legislature and
the Michigan Public Service Commission that could require utilities to
have part of their future power generation come from renewable sources. Such a
renewable portfolio standard, enacted in 21 states, has the backing of Gov.
Jennifer Granholm and many current and prospective state lawmakers.
But
there’s mixed opinion among business, and between Michigan’s two largest
utilities.
Consumers Energy Co., which derives about 5 percent of
its portfolio from renewables and expects that amount to increase to 6 percent
to 7 percent through its year-old “green generation” program, is wary of a
mandate that it says could force utilities to buy power they don’t need or that
is more expensive than other sources.
“If it has the effect of
unnecessarily increasing cost for all customers, that’s clearly not desirable,”
said Dan Bishop, Consumers’ public-information director. The utility supports a
voluntary program.
The Detroit Edison Co., however, says a
renewable standard “should be a part of a state energy strategy that deals with
the state’s long-term needs for generating capacity at stable, competitive
prices. We are supportive of a well-thought-out standard that will allow the
state to move forward with the development of renewable energy in a meaningful
manner within a reasonable time frame.”
Scott Simons, senior
media-relations representative, said the utility would like any standard
ultimately adopted to apply to all who supply electricity. He said the standard
should also be “well-defined and economically viable, allowing participants
their cost recovery.”
About 1 percent of Edison’s portfolio comes from
renewable sources, primarily hydroelectric plants and landfills where methane is
captured to produce electricity. The PSC last month rejected a renewable-energy
program proposal submitted by Edison and asked it to submit a revised proposal
by March 30.
A state renewable portfolio standard could encompass sources
like wind, solar, water or biomass, which includes wood or plants burned to
generate electricity and methane captured from landfills.
The issue arose
in the Oct. 10 gubernatorial debate, when Republican Dick DeVos was asked if he
would support a renewable standard that would require utilities to have 20
percent of power generation come from renewable energy sources. At the time,
DeVos said he would “be happy to work toward that goal.”
But last week
his press secretary, John Truscott, clarified the statement. Truscott said DeVos
supports working toward greater use of renewables and alternative energy, “but
for government to mandate it is not the right way to go.”
Granholm,
though, believes it is. And coming by years’ end is an energy plan from PSC
Chairman Peter Lark that will include a renewable portfolio standard
recommendation. Lark said the recommendation will probably be in the range of
requiring 7 percent to 10 percent renewable power generation by 2016, although
he said the percentages and timeframe could change as he completes his report to
the governor.
The 21st Century Energy Plan will include
recommendations on ways to meet short- and long-term electricity demand and to
reduce reliance on fossil fuels through energy efficiency, alternative energy
and renewable energy technologies.
Also brewing is a bill, likely to be
introduced after lawmakers return to session in November. Sources familiar with
bill drafts sponsored by Sen. Patty Birkholz, R-Saugatuck, said a renewable
portfolio standard that starts at 4 percent and over several years rises to 8
percent is being discussed.
Birkholz, however, would not discuss
specifics of the bill and said she ideally would like to avoid a mandate. She
said she is looking at incentives to achieve greater reliance on renewable power
and less reliance energy imports.
“I do not want to hurt our economic
engine, but I do want to protect our goal to get off energy dependence on
foreign oil” and do more with renewable sources, Birkholz said. “I would like to
make the carrot bigger than the stick.”
But Andy Such, executive director
of the Michigan Sustainable Energy Coalition, said if a renewable target
is voluntary, “it’s not really a law, it’s just a suggestion. And unfortunately,
we do have to mandate it.”
The coalition’s members include environmental
and agricultural associations, alternative-energy companies and small-business
interests.
Such said a required standard would promote the development of
renewable energy sources as well as make Michigan attractive to companies
involved in the renewable energy industry, like those who manufacture wind
turbine components.
“We think that once we have a (standard) in place,
that the MEDC (Michigan Economic Development Corp.) will be able to go
out and actively recruit some of these companies to come to Michigan,” he said.
Such is also president of EnviroPolicy Consultants in
Lansing.
Environment Michigan, an Ann Arbor-based organization,
has gotten at least 85 state House and Senate candidates, including both those
in office and seeking it, to sign onto a list of energy principles and goals
that include a 25 percent renewable portfolio mandate by 2025.
Director
Mike Shriberg said the pledge provides a way to identify people who will be
leaders on energy policy in the upcoming Legislature as well as move the state
toward renewable energy, energy efficiency and alternative-energy technologies,
he said.
But the Michigan Chamber of Commerce has urged lawmakers
not to sign the pledge, and says requiring the use of 25 percent renewable
energy will be expensive and unworkable.
The chamber points to a draft
report from a 21st Century Energy Plan workgroup that cites a preliminary target
of 7 percent renewable resources by 2016 as reasonable to consider.
“How
would we get from that 7 percent to that 25 percent? It isn’t doable, it isn’t
feasible,” said Doug Roberts Jr., the chamber’s director of environmental and
energy policy. “We’d like to see incentives put in place to encourage more
people to use renewable energy, but not mandate its use in the
marketplace.”
Shriberg said Michigan’s offshore wind energy potential is
one key element to consider in the future that is not incorporated into the
draft renewable estimates.
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