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Michigan energy task force readies propane report, but questions loom

The U.P. Energy Task Force, chaired by Michigan Department of Environment, Great Lakes and Energy Director Liesl Eichler Clark, met Tuesday at Northern Michigan University in Marquette.

The Upper Peninsula’s dependence on propane is a factor in the state’s debate over the future of the Line 5 natural gas pipeline.

MARQUETTE, Mich. — A Michigan task force is preparing recommendations for responding to the risk of short- or long-term disruptions in propane supplies, but the work is also raising broader questions about the Upper Peninsula’s energy future.

Michigan Gov. Gretchen Whitmer created the U.P. Energy Task Force by executive order in June, appointing a panel of state officials, energy experts, and industry and advocacy groups to study the region’s energy future amid uncertainty over the Line 5 pipeline and high electricity prices.

The first phase of the task force focuses on alternative propane delivery options in the event of short-, medium-, or long-term supply disruptions. 

The task force held its sixth meeting Tuesday at Northern Michigan University in Marquette, discussing potential recommendations in the coming months. Whitmer’s executive order requires a propane plan submitted by March 31 that focuses on “security, reliability, affordability and environmental soundness.”

“It’s important to step back and take a thoughtful approach on how we think about representing residents with a broad-based approach to energy,” said Liesl Eichler Clark, task force chair and director of the Department of Environment, Great Lakes and Energy.

The issue of propane adds complexity to the debate over Line 5 and continuing its operation through Michigan with a tunnel in the Straits of Mackinac. Tunnel supporters say Line 5 is crucial for providing propane — which is produced from natural gas liquids at a station in Rapid River near the north shore of Lake Michigan — for nearly one-fifth of Upper Peninsula households. Critics contend that a combination of truck, rail and storage would have minimal price impacts on customers over time.

The task force on Tuesday discussed potential energy efficiency programs for low-income propane customers, increasing propane storage, the need for fuel diversity, and agriculture’s role in driving propane demand. 

Task force members also expressed interest in acquiring contingency plans from Enbridge and Plains All American Pipeline, which owns the natural gas liquids in Line 5 that are converted into propane. 

“As a wholesale supplier, there’s a lot of money out of their pocket in the event of a disruption,” said task force member Jim Kochevar, general manager at mining company Cleveland-Cliffs. “I would think that incentivizes them significantly to have some fallback plan for delivery. We don’t know what that is.”

Indeed, the relatively unregulated propane market in Michigan differs from electricity and natural gas suppliers, Eichler Clark said. 

“We’re talking about companies that have contingency plans but they don’t need to share them with us,” she said. “It puts us in a tough position — we’re talking about a population that’s dependent on [propane].”

A report from outside firm Public Sector Consultants will also examine how propane would reach Upper Peninsula customers in the event of a disruption.

Long-term questions

While the task force is now focused on propane, Tuesday’s meeting also raised challenging questions for the months ahead, such as the long-term role of propane in what is now an interwoven market of pipeline companies, transporters, wholesalers and retailers. Shutting down Line 5 — a fierce dispute between environmental groups and pipeline supporters — would disrupt this interconnected system; the only immediate alternatives are transporting propane by truck or rail.

“The just-in-time nature of this large system is so carefully calibrated that it makes it more brittle to disruption,” said task force member Jennifer Hill, a Marquette city commissioner and representative of the Citizens Utility Board of Michigan.

Kochevar responded: “Do you make it less brittle by reducing the demand side? Is it fostering a movement away from propane?”

Complicating the equation: the sparsely populated and geographical nature of the Upper Peninsula, where roughly 22,000 households depend on propane for home heating. Residents here often have one or two backup sources for heating (such as wood stoves), while many don’t have access to natural gas distribution lines.

Asked about propane’s long-term role in the region, Eichler Clark responded: “It’s always driven by economics. The question becomes: What do we support with our policies to influence the economics of things?”

Energy efficiency — or lowering the region’s demand for propane — will likely play a role in the task force’s recommendations. Members raised questions about using energy efficiency funding for potential fuel-switching — or transitioning propane customers to electric heat pumps, for example — as renewable energy prices decline.

“I’m nervous about introducing ideas around fuel-switching, which tend to be hugely controversial at this point,” said Michigan Public Service Commissioner Dan Scripps.

Meanwhile, a sense of urgency underscores the task force’s work amid uncertainty over Line 5. While ongoing court cases leave questions about the potential for a Line 5 tunnel in the Straits of Mackinac, some residents at Tuesday’s meeting said the pipeline poses an immediate risk. 

“What I’m thinking about is, ‘What would happen if Line 5 broke today?’” said L’Anse Township resident Catherine Andrews, who relies on propane trucked in from Wisconsin for heating. “It’s nice to sit around and think about scenarios, but if it actually happened, we’re not prepared.”

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