November 1, 2012
A proposed Michigan ballot initiative that would require the state to generate 25 percent of its electricity from renewable energy sources by 2025 has pitted out-of-state environmentalist groups against the local businesses that will bear the brunt of the economic burdens the measure would impose.
Proposal 3 would amend the state's constitution to incorporate the "25 by 25" requirement, increasing Michigan's renewable energy standard from the 10 percent level mandated by a 2008 law. Recent polling has shown 45 percent of Michigan voters opposing passage and 41 percent in favor.
Michigan campaign finance databases reveal that both sides of the fight are being financed mostly by a small number of organizations. The pro-Prop 3 effort is being led by a ballot committee financed by a host of prominent environmentalist groups. Opposing the measure is a committee backed almost entirely by Michigan's two largest utilities.
Studies suggest that the ballot measure would increase energy prices for Michigan residents and reduce employment, income and business investment in the state. It is therefore notable that the anti-Prop 3 effort is financed mostly by in-state companies, while support for the proposal is funded primarily by special interests headquartered in Washington D.C., California and New York City -- primarily through a ballot committee called Michigan Energy Michigan Jobs.
Of the $11.1 million MEMJ has collected in 2012, about 85 percent has come from major environmental advocacy groups, including, in order of magnitude, the League of Conservation Voters, the Green Tech Action Fund, the BlueGreen Alliance, the American Wind Energy Association, the Natural Resources Defense Council, the Environmental Law and Policy Center, the Environmental Defense Action Fund, the Regeneration Project and the Union of Concerned Scientists. The only individual donor to give MEMJ more than $1,000 is millionaire New York hedge fund manager Julian Robertson, who gave $1 million.
MEMJ has received smaller contributions from Michigan residents and some local organizations, but most of its funding comes from environmentalist groups headquartered outside Michigan, which collectively spend hundreds of millions of dollars to advance green energy proposals around the country.
Michigan utilities DTE Energy and CMS Energy (directly and through subsidiary Consumers Energy) are providing about 95 percent of the $25 million in funding on the other side, through a ballot committee called the Clean Affordable Renewable Energy for Michigan Coalition.
The pair of utilities say Prop 3 will increase consumer electricity costs and damage the state's economy. "We believe this is bad energy policy," a DTE spokesman told the Detroit Free Press. "We think this is bad for customers, we think this is certainly going to increase costs."
There are data to back up those claims. Economists David Tuerck, Paul Bachmann and Michael Head released a study in September showing that, compared with a Michigan without any renewable mandate, the 25 by 25 requirement would likely eliminate 10,540 Michigan jobs, increase electricity prices by 16.2 percent, reduce disposable income by $1.42 billion, reduce investment by $147 million and impose an additional $2.55 billion in costs on the Michigan economy generally.
Environmentalist groups argue that Prop 3 mitigates the damage by capping electricity rate increases at 1 percent annually. But as Tuerck and the others note, "Electricity providers may be able to pass the costs ... onto consumers in ways the caps do not prevent. If, on the other hand, the caps do protect ratepayers, the costs may end up being borne by the utilities -- a dynamic that can also adversely affect the economy."
Some business and labor leaders have also united in opposition to the measure. Michael Langford, president of the Utility Workers Union of America, and Chuck Hadden, president and CEO of the Michigan Manufacturers Association, penned a joint column warning that Prop 3's "staggering cost burden" would be "bad for our businesses, families and workers."
Those who dispute that view do exist, but they are primarily based outside the state. So although Prop 3 supporters do not have a direct stake in the outcome, the groups financing the opposition will have to deal with its economic consequences, should it pass.
Lachlan Markay is an investigative reporter for the Heritage Foundation's Center for Media and Public Policy.
First appeared in The Examiner.