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Michigan regulators: renewables cost less than coal

The following statement, by a conservative public service commission in Michigan, is a sitting duck for controversy.

"A Michigan Public Service Commission (MPSC) report show's Michigan's renewable energy standard is directly sparking Michigan's economy, generating $100 million in investments, spurring manufacturing and business growth, and creating jobs, the Energy Innovation Business Council said today. The report also shows that renewable energy now costs less than coal."

Personally, I will be fascinated to see how this statement and the report that purportedly supports it play out in the media and the presidential campaign. Many of us consider the 2012 election an opportunity for the American people to choose a candidate that reflects their view on clean energy, among many other issues. But any time someone compares renewable energy sources to coal—let alone states that the former is less costly than the latter—they're looking for attention.

Of course, this bombshell landed yesterday, just before last night's Republican primary debate and days before Michigan's voters go to the polls next Tuesday to cast ballots in their state's Republican primary. That's a "closed" primary in which any voter who declares their interest in voting in the Republican primary may do so. In practical terms, Michigan voters of many stripes are likely to determine a very important dynamic: whether Rick Santorum or Mitt Romney gets a much-needed boost prior to the Super Tuesday contest on March 6, in which 10 states hold their primaries.

Let's connect current events to the future of clean energy efforts, leaving aside for the moment the argument over whether renewables have reached parity with fossil fuel costs. (Perhaps I'll undertake to examine the MPSC's logic around that issue in tomorrow's column.)

Michigan, of course, is pivotal in the 2012 Republican primaries because Mitt Romney grew up there; his father served as governor of the state during tumultuous times, 1963-1969. Forty-three years later, George's son is looking for some home state love as Santorum pulls ahead in many polls. Santorum has made much of his grandfather's coal mining experience.

Will a moderator at the debate or a reporter covering the primary next Tuesday pose a related, clean energy question to the candidates? It would be good to know where the two leading Republican candidates stand on the general issue of clean energy and economic development and the particular question of the Michigan commission's surprising finding.

Why would folks in the smart grid space care? Well, if President Obama wins in the fall, but faces a House controlled by his opposition, federal energy policy will remain gridlocked. Should one of the Republican candidates win the White House and have an allied Congress, which direction will they go on federal energy policy? We know Santorum and Romney are hostile to regulation in general and environmental regulation in particular. But what  are their positions on the dozens of key issues buffeting the power industry? The Michigan report would be an excellent vehicle for finding out. 

How Michigan regulators reached their conclusions linking clean energy to economic development should be examined, because Michigan has been hit so hard in the downturn that it has developed a very practical approach to growth. The state is not likely to be chasing chimeras.

I think back to two examples of Michigan's outlook that I've covered.

First, I closely covered Consumers Energy's efforts to test and deploy advanced metering infrastructure and foundational IT systems in a cooperative fashion with the commission's oversight and the state's other utilities. (See "Consumers Energy's Measured Steps.")

That story made clear that the MPSC was exercising its full power to ensure that any such grid modernization programs were beneficial and cost-effective for the state's ratepayers, who've been battered more than most Americans during the recent recession.

The other insight was a talk given in November 2010 at an Itron users' conference by Steven Kurmas, president and CEO of Detroit Edison, an investor-owned utility serving southeast Michigan. Kurmas described some of the impacts on Detroit and his utility as a result of "the most difficult economy in our lifetimes." Whereas the average ratepayer nationally pays out 3.7 percent of their out-of-pocket expenses on home energy use, Detroiters spend as much as 10 percent, largely due to poorly insulated homes, Kurmas said.

The upshot is that scorching economic times have given Michigan a very conservative, show-me-the-money-and-the-hard-numbers kind of perspective. If steely-eyed realism has resulted in a positive take on the economic development aspect of clean energy, either there's really something to base that on or those folks have, under pressure, lost their minds.

I'm guessing it's the former. In fact, the bombshell press release and report cited here was a cooperative effort between the MPSC and the Energy Innovation Business Council. According to the EIBC, it "aims to diversify and accelerate the growth of Michigan's energy sector and create partnerships to expand business opportunities, secure access to capital, engage the public and policymakers, advocate and build consensus for policy, and advance energy innovation with the goal of generating jobs and economic development."

According to regulators and businesses in one of the nation's hardest hit states, that approach is working. Let's see what everyone else now has to say.

Phil Carson
Intelligent Utility Daily

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