Michigan voters sent a strong message to the U.S. renewable energy industry, rejecting a proposed state constitutional amendment that would have forced consumers to purchase 25 percent of their electricity from so-called renewable sources by the year 2025.
Proposition 3, also known as 25×25, would have required consumers to purchase dramatically more electricity from wind, solar, biomass, and hydropower. Currently, these expensive sources power only 4 percent of Michigan’s electricity.
Voters decisively defeated the initiative by a margin of 62 percent to 38 percent.
“Environmental groups were expecting success for 25×25, believing that a win would send an important signal to the nation that public desire to move toward green energy remains strong,” Marita Noon, executive director at the Citizens Alliance for Responsible Energy, said.
“Due to increased electricity rates, Proposition 3 would have been economically devastating to a state already reeling from a manufacturing exodus and subsequent high unemployment,” she added.
Aggressive State Mandates
Todd Wynn, director of the Energy, Environment, and Agriculture Task Force at the American Legislative Exchange Council (ALEC), says environmental activists are constantly pushing for more aggressive renewable power mandates in state legislatures.
“Michigan is the latest example of the failure of these efforts,” said Wynn. “Voters are beginning to understand the potential economic implications of forcing electric utilities to integrate renewable energy into the electricity grid.
“Michigan voters made the right decision as this more aggressive mandate would have increased electricity rates more than 15 percent and hurt households and businesses in the state,” he added.
Economic Punishment Proposal 3 would have tightened renewable power mandates already in effect in Michigan. By law, Michigan consumers will have to purchase 10 percent of their power from renewable sources by 2015.
Katie Tubb, a researcher at the Heritage Foundation, says Michigan energy providers are having a difficult time meeting the existing mandate, especially with renewable power already pushing energy prices higher.
“Michigan isn’t even halfway to achieving their current mandate, and yet prices continue to climb,” Tubb said.
Studies show existing renewable power mandates are already punishing state economies Wynn says.
“One such study analyzed the impact of the 10 percent mandate on Michigan’s economy and found that electricity rates could increase up to 8.6 percent” when the mandate is fully implemented, said Wynn.
The Michigan-based Mackinac Center for Public Policy, a nonpartisan research and educational institute, reports the existing renewable power mandate is already killing jobs in the state due to higher energy prices.
“We estimate that the increased electricity prices caused by the 10 percent mandate cost the state 7,220 jobs and that the 25 percent mandate would’ve cost the state even more,” Mackinac Center Assistant Director of Fiscal Policy James Hohman said.
A 25 percent mandate would kill more than 10,000 Michigan jobs, increase electricity prices by 16 percent, and cost the state economy more than $2.5 billion, a recent Mackinac study concluded.
Voters Pushing Back
Wynn said American voters generally like the idea of renewable energy but don’t want mandates to force them to pay higher prices for electricity.
“Polls show that majorities support the thought of using more renewable energy technologies. But once the reality of the cost of such mandates is known, support wanes,” he said.
Wynn predicts citizens and legislators will begin to push back against existing renewable energy mandates and repeal rather than expand them.
“I hope Proposition 3’s defeat will send a signal to state legislators that the tide has turned and the public has awakened to the high costs of renewable energy mandates. Legislators can no longer be hoodwinked by green energy schemes that raise the electricity rates, kill jobs, and line the pockets of a favored few,” said Noon. “Those legislators that don’t get the message will likely pay a steep political price in upcoming elections.”
Tubb said, “Government mandates, no matter how well intentioned, set up winners and losers regardless of their market value. The only way to be fair, to have a level playing field, is to let consumers be the decision makers.”
Alyssa Carducci ([email protected]) writes from Tampa, Florida.
“The Projected Economic Impact of Proposal 3 and Michigan’s Renewable Energy Standard,” Mackinac Center for Public Policy: http://news.heartland.org/sites/default/files/beacon_hill_mackinac_mi_renewables.pdf