Collaboration Among State-Based Think Tanks Makes for Better Energy Policy

Michigan residents already pay the highest electricity rates of anyone in the Great Lakes region, and they do so for electric utility services that rank in the top five nationally for outages. That means we pay more than adjacent states but get less reliable electric service. Worse, the long-term plans for the state’s two big regulated monopoly utilities indicate that Michigan’s electricity rates will become even more expensive and less reliable.

The Environmental Policy Initiative at the Mackinac Center was happy to welcome David Stevenson, policy director at Delaware’s Caesar Rodney Institute, to our offices in March. Stevenson has a rich background in energy policy, having served on President Donald Trump’s Environmental Protection Agency transition team in 2017. He also regularly takes part in electricity planning and rate issues at Delaware’s Public Service Commission.

We sought his input on two documents — 20-year “integrated resource plans” — published by Consumers Energy and DTE, Michigan’s two, big regulated monopoly utilities.

As he and I worked through these plans, we confirmed that Consumers and DTE plan to close many of their large baseload generation facilities to pursue a self-imposed 50-percent clean energy goal by 2030. We found a string of problems with their plans:

• The state does not require the utilities to meet a 50-percent clean energy goal. Under state law, utilities must produce 35 percent of their electricity from a mix of renewable energy sources and energy efficiency measures by 2025. But recent University of Chicago studies showed that while renewable portfolio standards and energy efficiency measures might reduce emissions from electricity generation, they do so at negative rates of return and cause double-digit increases in electricity prices.
• A heavy and growing reliance on renewable energy sources could leave Michigan residents cold and in the dark. Extreme cold temperatures this last January demonstrated the inherently unreliable nature of wind generation. As temperatures plummeted, wind generation all but disappeared, dropping below 4 percent of the region’s electricity mix. That left the coal, nuclear and natural gas facilities — many of which are now targeted for closure — to keep the lights and heat on.
• The vast majority (80 percent) of utility customers are unwilling to pay even $10 a month for an increase in renewable energy. A 2017 University of Michigan survey asked people across the country how much they would be willing to pay for more renewable energy production: 34 percent would refuse to pay any more; 28 percent would only pay $1 to $50 per year; and 18 percent would pay $50 to $100 per year.

Collaborating with other state think tanks helps to ensure that we stay up-to-date on best practices and learn from policy experts who already work in areas of importance to our supporters.

Our work with allied think tanks like the Caesar Rodney Institute is another example of the valuable relationships we enjoy through State Policy Network. Collaboration is one of the things that helps to make sure that we are taking every opportunity to push Michigan’s electricity policy in the direction of free markets, improved reliability, fewer subsidies, and competitive rate reductions.