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Analysis: Why Michigan’s renewable energy amendment failed

A screen capture from an ad by the utility-backed Clean Affordable Renewable Energy for Michigan opposing Proposal 3.

In September, a Lansing, Michigan, based polling firm surveyed the state’s electorate, and found that 55 percent of Michiganders supported Proposal 3, a ballot measure that would have strengthened the state’s modest renewable energy standard by requiring the state’s utilities to obtain 25 percent of their electricity from renewable sources by 2025. At the time, only 34 percent opposed it.

But on Election Day, 62 percent of the state’s voters rejected Proposal 3, stunning renewable energy advocates and forcing them back to the drawing board.

So what happened? And what lessons can be drawn from Proposal 3’s defeat?

Not a defeat for renewable energy

For starters, Michiganders were not rejecting renewable energy.

The state already has a modest renewable energy standard that it passed in 2008. That law, known as Public Act 295, has put the state on track to obtain 10 percent of its energy from wind, solar, biomass and hydroelectric power by 2015.

And if opponents of Proposal 3 really believed that Michiganders wanted more coal-fired power plants and fewer wind turbines, they likely would not have named their opposition group “Clean, Affordable, Renewable Energy for Michigan,” despite the fact that it was created by a public relations firm funded largely by the state’s two largest utilities and their parent companies to oppose an increase in renewable energy.

Nor would CARE for Michigan representatives have told reporters that they favored renewable energy, even as they spent millions to fight the ballot measure. For instance, Megan Brown, spokeswoman for the group, told Midwest Energy News last week that “we’ve said all along that we support renewable energy. The stakeholders in our group, including the two major utilities, have invested heavily in renewable energy projects.”

Did Michiganders simply believe instead that the state was going too far, too fast toward renewable energy? That’s doubtful, too, or they wouldn’t have favored the measure in September. The American Wind Energy Association says exit poll results show only 1 percent of voters who rejected the amendment did so because they were opposed to expanding renewable energy.

According to the poll cited by AWEA, 60 percent of voters opposing the measure say they didn’t want to see their state constitution mandate it. That’s also the argument that CARE for Michigan pushed. “The voters understand that the constitution was not the place for energy policy,” Brown said.

There’s probably something to that argument, given that five of the six ballot initiatives to amend the state’s constitution were “crushed,” according to the Detroit Free Press.

All about the money?

What prompted this abrupt turn in public opinion? The most likely explanation comes down to money—and questionable claims about the ballot measure’s impact. The pro-amendment folks were outspent by a three-to-one margin, and CARE, the utilities’ opposition group, spent that money blanketing the airwaves with ads that sowed fear and confusion about Proposal 3, while making calmer, reasonable-sounding arguments to reporters.

Ads with ominous-sounding voiceovers warned of “California billionaires” seeking to alter Michigan’s constitution to their own ends. It’s true that an out-of-state group, the Green Tech Action Fund, did contribute $1.3 million to the main group promoting Prop 3, a bipartisan coalition of environmentalists, wind energy companies, unions, and religious leaders called Michigan Energy, Michigan Jobs (the coalition included members of RE-AMP, which also publishes Midwest Energy News).

The ads clearly misled Michiganders, however, when they said that residential customers would pay out the nose on their electric bills if the measure passed.

“We’ve got utilities just making stuff up. They don’t bother with reports,” James Clift, policy director of the Michigan Environmental Council, said last month.

Television ads aired by the utility group said electricity bills would rise $2,500.  But the assumptions used in that calculation are questionable at best.

CARE for Michigan first estimated the costs of new wind turbines that would be needed to meet the 25 percent renewable standard (both sides acknowledge that most of the renewable generation would be from wind.) That came to $12 billion. They then divided it by 4.7 million—the number of ratepayers in Michigan. That came to $2,500 per customer.

That figure, however, is misleading. That’s because the state’s 500,000 industrial customers consume far more electricity than the average household. The state’s 4.2 million residential customers would pay just 40 percent of the total costs of building those turbines, or $5 billion. Divide that total by 4.2 million customers and you get  $1,190.

However, that $1,190 is spread out over the 25-year life of a wind turbine. So the actual cost per year, according to the utility group’s own cost assumptions, would be $47.60, or $4 a month.

But that figure still doesn’t account for the cost savings of not having to buy coal and not having to upgrade old coal plants, Clift said.

“Our numbers are 50 cents a month,” he said.

Looking forward

So what are the take-home lessons?

First, there is—or can be—broad, bipartisan support for renewable energy. The coalition that fought for Proposal 3 ncluded the usual suspects—environmental groups, wind developers, and unions—but it also included the League of Women Voters, the NAACP, the Michigan Nurses Coalition, a former chair of the Michigan Republican Party, and the Christian Coalition.

Second, renewable energy advocates should think twice about how to get more wind, solar, biomass and hydro into the electricity generation mix. Although their frustration with slow-moving legislatures is understandable, voters understand that constitutions, even more malleable state constitutions, should not be altered lightly.

Third, if scaling up renewables threaten utilities’ profits, the utilities will spend boatloads of money to stop or slow the process, and their efforts may well succeed. Both Detroit Edison and Consumers Energy rely mostly on coal to produce electricity, and Detroit Edison’s parent company, DTE Energy, owns nine other companies besides Detroit Edison that profit from coal—two that move coal in from Western mines, and seven that crush coal and treat it with chemicals to reduce emissions. Both companies clearly feared that the increase in renewables from Proposal 3 would cut into their profits.

Fourth, and perhaps most important, in the long run the fate of renewable energy may not even hinge on renewable energy standards at all. Wind energy in Michigan now costs much less than a new coal plant, according to a February 2012 report from the Michigan Public Service Commission. Electricity from a new coal-fired power plant, the commission concluded, would cost $133/MWh, while new wind-powered electricity would cost $61-$64/MWh.

In a post-election press conference organized by Michigan Energy, Michigan Jobs, the group made it clear that despite their crushing defeat, they weren’t going away.

“This is just the beginning of our fight to increase renewable energy in Michigan,” said Mark Fisk, the group’s spokesman. “We are united in our belief that Michigan can be a leader in the clean energy of the future.”

Comments (3)

Intermittent wind and solar are not practical alternatives to nuclear and coal for base load power. No large fossil fuel power plant on earth has been replaced by wind and solar.

By Rolf Westgard on Nov 14, 2012

Rolf, you keep repeating that argument. Why do you see that as the standard? Why not modernize the grid to accommodate distributed generation of all types?

By Ken Paulman on Nov 14, 2012

I wonder how much the under takers pay the coal plants to keep pumping poison in are air ???

By charles on Nov 25, 2012