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E-M:/ Renewable Energy Debate Highlighted in Crain's Detroit Business


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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