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Monday, December 21, 2015

Sierra Club Submits Letter of Opposition to Nexus Pipeline - 12/21/15

Sierra Club Michigan Chapter

Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission
888 First Street NE, Room 1A
Washington, DC 20426

Dear Ms. Bose,

The comments submitted below are pursuant to the proposed Nexus Pipeline (Docket #CP16-22-000).  These comments are submitted on behalf of the Sierra Club Michigan Chapter, 109 E Grand River Avenue, Lansing, MI 48906.

Nancy Shiffler
Chair, Michigan Beyond Natural Gas and Oil Committee

December 21, 2015

The Michigan Chapter of the Sierra Club opposes the proposed Nexus pipeline for the following reasons:

Questionable need for this pipeline
•   The AEO 2015 Early Release forecasts that Marcellus gas production will remain relatively flat from 2015 thru 2030.  http://www.eia.gov/forecasts/aeo/workinggroup/oil-naturalgas/pdf/oilandnatgas_presentation_91614.pdf
•   Natural gas demand in Eastern Canada is in decline.  In spite of phasing out coal, natural gas declined to only 7% of Ontario’s 4th quarter 2014 electric production. Hydro and nuclear accounted for 87%, and wind 6%.  (In Quebec, almost all electricity comes from hydro.) http://www.ontarioenergyreport.ca/pdfs/Energy%20Quarterly_Electricity_Q4.pdf

•   Few US and Canadian LNG export plans will be realized.  According to analysts, “Huge cost overruns, poor planning, changing market conditions and emerging skinny margins will likely kill many projects across the world, or postpone their materialization to an uncertain future; Canadian projects likely will be the hardest hit. Of the 15 proposed Canadian LNG export facilities, none have reached a final investment decision.”  http://theadvocate.com/news/business/10650285-123/falling-oil-prices-put-proposed

•   Based on a February, 2015 Department of Energy report (“Natural Gas Infrastructure Implications of Increased Demand from the Electric Power Sector”—http://energy.gov/sites/prod/files/2015/02 /f19/DOE%20Report%20Natural%20Gas%20Infrastructure%20V_02-02.pdf), only 54% of current pipeline capacity is being used.  One of their key findings:  “Higher utilization of existing interstate natural gas pipeline infrastructure will reduce the need for new pipelines.”  Even so, FERC is in the process of approving far more pipeline capacity than the DOE and EPA say are needed.  For example, FERC is reviewing applications for 48 Bcf/d additional Marcellus pipeline capacity to be built over the next few years.  The DOE finds only 8.4 Bcf/d is needed over the next 15 years.
   Analysis of SNL Energy data finds these pipelines are underutilized most of the time.  “We definitely can see slowdowns already in Midwest — Rover and Nexus pipeline expansions, the Prairie State pipeline to deliver REX gas to Chicago city gates.  It's not clear from today's standpoint that the market needs these pipelines, and we're already starting to see them slow down a bit, as well as some LNG projects."…. "Demand growth itself, as a result of conservation and demand-side management and lower GDP growth post financial crisis, is really taking the wind out of the sails of generation demand growth that natural gas can accommodate." https://www.snl.com/InteractiveX/article.aspx?ID=34292452&KPLT=4
•   According to Robert Huffman, Spectra Energy’s business development director, "Going forward, there's been such a buildout already in commitments to realign and re-pipe the grid," Huffman said. "Maybe we're reaching a point where things have caught up." http://www.platts.com/latest-news/natural-gas/pittsburgh/appalachian-gas-pipeline-developers- facing-more-21310494
•   FERC must consider that Nexus’ binding shipper agreements were signed over a year ago, and FERC must evaluate the current soundness of these agreements and companies.  Nexus must present FERC with “legally binding precedent agreements showing that the pipeline will be fully or nearly fully (85%) subscribed for a minimum of ten years.”  http://www.naruc.org/Grants/Documents/ICF-EISPC-Gas-Electric-Infrastructure-FINAL%202014-12-08.pdf. It is doubtful that many Nexus shippers are financially sound enough to fulfill this requirement.  Many Marcellus/Utica E&P companies are predicted to go bankrupt (unless they sell themselves or otherwise sell off major assets). Here is a “ Death list” report listing very risky companies and their unacceptably high debt-to-earnings ratios: 
Antero Resources (4.99), EV Energy Partners (6.54), Halcon Resources (7.81), Magnum Hunter Resources (52.29), REX Energy (5.06), Vantage Drilling (6.16), and Warren Resources (5.50). http://www.investorvillage.com/uploads/77263/files/OXFORD19CODEBTHITLIST.pdf?cmpid=verticalcontent
•   FERC needs to do more evaluation of the Certificates of Need policy: 
“The Commission balances the public benefits against the potential adverse consequences. ... the applicant's responsibility for unsubscribed capacity, the avoidance of unnecessary disruptions of the environment, and the unneeded exercise of eminent domain in evaluating new pipeline construction.” http://www.ferc.gov/legal/maj-ord-reg/PL99-3-000.pdf.  Given that considerable environment, quality of life and billions of dollars are at stake, it would be a travesty for FERC to approve a pipeline that would later be greatly underutilized or abandoned because of neglectful disregard of risky shipper financials.
Adverse Environmental Impacts

•   The pipeline and related infrastructure construction would cause irreversible damage to thousands of acres of forests, wetlands, and fields.  Relevant to this issue is the June 2014, decision by the U.S. Court of Appeals for the District of Columbia, Delaware Riverkeeper Network, et al. v. Federal Energy Regulatory Commission, Tennessee Gas Pipeline Company, which noted FERC’s responsibility to consider cumulative impacts.  FERC should consider the cumulative impacts of the entire length of the Nexus pipeline and the activities that produce the gas to be transported through the pipeline.

•   Farmlands would be impacted through potential damage to drainage tiles, soil compaction, and destruction of orchards and productive woodlands in an area that has some of the highest agricultural land values in the state.  Soil compaction affects the structure of the soil and can reduce productivity for years beyond the actual construction of the pipeline.  Temporary plugging or damage to drainage ditches and underground tiling could have affects extending beyond the construction area.  Impacts on drainage into Lake Erie would be of particular concern. 

•   Air pollution from construction and operation of the pipelines is a health hazard.  FERC has already determined that the estimated construction emissions for the Rover pipeline would exceed the thresholds for ozone and particulate matter in the Detroit-Ann Arbor maintenance area.  Once in operation, the pipelines, and particularly the compressor stations, produce emissions of methane and volatile organic compounds.  In addition, the gas produced from the Marcellus is known to have potentially significant concentrations of radon; this should be factored into the chronic losses of pipeline gas, particularly from compressors.

•   As part of its environmental review, FERC should estimate the green house gas impacts from the production, transport, and usage of the gas, including methane leakage from the production sites, the pipeline and compressor stations, and the CO2 releases from increased burning of natural gas.  This analysis would be in line with the President’s recently announced targets to cut net greenhouse gas emissions 26-28 percent below 2005 levels by 2025.

•   Finally, FERC should consider the potential environmental impacts of increased use of hydraulic fracturing in the Marcellus region as a result of the new markets targeted by this and similar projects.  These impacts include: air and water quality (http://files.dep.state.pa.us/OilGas/BOGM/BOGMPortalFiles/OilGasReports/Determination_Letters/Regional_Determination_Letters.pdf); health impacts (Concerned Health Professionals of New York. (2014, December 11), Compendium of scientific, medical, and media findings demonstrating risks and harms of fracking (unconventional gas and oil extraction) (2nd ed.). http://concernedhealthny.org/compendium/); and worker safety (http://www.eenews.net/login?r=%2Fenergywire%2F2014%2F10%2F20%2Fstories%2F106000753).

Adverse Impact on Landowners and Local Communities

•   Safety impacts are of paramount concern.  The required setbacks from homes and other buildings are insufficient to account for the potential impact radius in the event of an explosion.  Of particular concern is the potential impact on dense residential areas such as the Ypsilanti area.

•   Rural areas served by small fire departments would be stretched thin in the event of a major explosion or a fire.

•   Local government concerns over the impact of heavy equipment on local roads and bridges must be addressed.  The potential costs to local communities should be fully assessed.

•   Individual landowners are rightfully concerned with the impact of the project on their property values, access to mortgages, and insurance coverage.  Estimates of these costs should be available from previous pipeline construction projects.

FERC’s own guidelines state “Landowners should not be subject to eminent domain for projects that are not financially viable and therefore may not be viable in the market place.”  We should not be pitting the safety, economic value, and environmental health of local property owners and communities against pipeline projects that are neither viable nor needed.

In summary, we oppose this project as having little or no demonstrated “public convenience or necessity” in light of the potential environmental and human costs.  FERC appears to have a very limited view of its responsibilities for rationalizing pipeline capacity or addressing climate change and cumulative environmental damage.  Consequently, we believe this project should be denied. 

Thank you for your consideration of these concerns.

Thursday, December 3, 2015

Position Statement on Energy Policy

Sierra Club Michigan Chapter Position Statement 

Energy Policy

Sierra Club encourages lawmakers to expand Michigan’s renewable energy and efficiency programs, and more specifically:
- Increase Michigan's renewable energy standard to 30% by 2030.
- Increase Michigan's energy efficiency/optimization standard from 1% to 2% annually.
- Remove the existing spending cap on Michigan's energy efficiency program.
- Ensure that "clean" or "renewable" energy is not redefined to include any fossil fuels, nuclear energy, or energy from incinerating wastes.
- Ensure that customers are able to produce their own energy and are allowed to either use that energy themselves or sell it back to a utility company at full price, not a wholesale price.
- Enable everyone to participate in community renewable energy projects.

Issue Background
In 2008, the Michigan Legislature passed the Clean, Renewable, and Efficient Energy Act (PA 295). The law put in place a Renewable Energy Standard (RES) that requires Michigan’s utility companies to obtain 10% of their electricity from clean and renewable sources by 2015. The law also created an energy efficiency program, which is funded through a small fee on all ratepayers’ energy bills to help homeowners and businesses make their homes and offices more energy efficient.

PA295 has been an unparalleled success. All major utilities have met the 10% renewable energy standard and have reduced/eliminated surcharges to pay for it. While the costs of coal and nuclear energy range from $108-133 per megawatt/hour, wind contracts cost between $43-59 per megawatt/hour, which is cheaper than natural gas at $67 per MWh. The Michigan Public Service Commission’s 2013 report on renewables states that Michigan can achieve a 30% renewable energy standard (RES) without technical difficulties or increased costs. PA 295 defined renewable energy to include solar, wind, hydroelectric, biomass, geothermal, and landfill gas.

Michigan’s energy efficiency standard of 1% annual savings has also been successful. For every $1 invested in our energy efficiency program, ratepayers have saved $4.38. Energy efficiency is the most cost-effective way to reduce spending on electricity, costing $11 per MWh, cheaper than any form of new generation. The 2008 law also set a cap on how much utilities could spend on energy efficiency.

Sierra Club Perspective
Fossil fuels create $523 billion of domestic public health and environmental costs annually and receive over $500 billion in annual subsidies from our government. The Legislature should increase Michigan’s RES to 30% by 2030 and increase its efficiency standard to 2% annually. This would combat subsidies/costs and promote meaningful progress in climate disaster mitigation. The legislature should also ensure that customers are able to produce their own energy and sell it at full price.

Michigan currently spends $24 billion per year importing fuel into the state. 100% of our fuel for coal and nuclear power comes from out-of-state, 99% of our petroleum and 80% of our natural gas as well. Solar, wind and energy efficiency have no fuel costs and don’t send our money out of state.

The Sierra Club opposes proposals to gut the definition of renewable/clean energy. Fossil fuels, nuclear energy, waste incineration, and pumped storage are not renewable energy sources. Energy sources that emit air pollution (including the greenhouse gases carbon dioxide and methane), water pollution, and produce radioactive waste should not be considered “clean energy” in Michigan’s laws.

Current Legislation on Clean Energy in Michigan
There is currently no legislation introduced to establish a 30% Renewable Energy Standard annual increase.

Sierra Club Supports the Following Bills
Powering Michigan’s Future legislation SB 295-297 and HB 4518-4519, HB 4055: increase Michigan’s renewable energy standard to 20% by 2022, gradually increase the energy optimization standard until reaching 2% annually in 2019 for electricity and 1.5% for natural gas, and eliminate the renewable energy surcharge.
Bill sponsors: Hoon-Yung Hopgood, David Knezek, Sam Singh, Marcia Hovey-Wright, Julie Plawecki.

Bipartisan Energy Freedom legislation HB 4878-4881: remove barriers for businesses and individuals to generate their own energy and receive fair-value pricing. Enable community energy projects.
Bill sponsors: Gary Glenn, Ed McBroom, Scott Dianda, Jeff Irwin

HB 4304 (Jason Sheppard): prevent natural gas utilities from raising rates to pay for fines and penalties. This bill is a positive step toward establishing stricter accountability for utility companies when they fail to comply with the law.

HB 4683 (Scott Dianda): require the Michigan Public Service Commission to adopt integrated resource plans for regions of the state. This is designed to make energy distribution in the Upper Peninsula cheaper, cleaner and more reliable.

Sierra Club Opposes the Following Bills
SB 437-438 (Mike Nofs, John Proos): sunset Michigan’s Energy Optimization standard in 2019, repeal Michigan’s Renewable Energy Standard, establish a definition for “clean energy” that includes polluting fossil fuels, implement a voluntary green pricing program, eliminate net metering, destroy the distributed energy market, and replace standards with an Integrated Resource Planning process.

HB 4297-4298 (Aric Nesbitt): replace renewable energy/efficiency mandates with an Integrated Resource Planning process, establish an unenforceable 30% renewable/efficiency goal, and remove sustainability criteria for wood/tree biomass.

SB 465 (Mike Shirkey): require the legislature to review Michigan’s State Implementation Plan (SIP) for the federal Clean Power Plan and give them the power to disapprove it. It would also prevent a SIP from being submitted if there is pending litigation against the Clean Power Plan. This will handcuff our ability to comply with the Clean Power Plan, slow down our implementation, and lessen our ability to mitigate climate change.

HB 4303 (Brett Roberts): allow natural gas utilities to expand their infrastructure with Michigan Public Service Commission oversight/review and use ratepayer money to pay for it. This ratepayer money should instead be spent on repairing/replacing old natural gas pipelines, distributed generation, community renewable projects, or energy efficiency.

HB 4066 (Ray Franz): completely ban offshore wind deeds, leases, or permits in the Great Lakes.

HB 4308 (Ray Franz): repeal Michigan’s current Renewable Energy Standard.

Friday, November 13, 2015

The Serious Dangers or Eating Cheap Meat

For several decades, Americans have enjoyed paying low prices for meat at the grocery store. Unfortunately, many are unaware of the hidden costs of "cheap meat"—and when you add them up, they are substantial.

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Thursday, November 12, 2015

Kalamazoo Mayor Hopewell's Letter on the Pallisades Nuclear Plant

The Defeated Citizen: State Integrity and Flint Water

The Defeated Citizen: State Integrity and Flint Water
By Jeremy Johnson, Communications Intern for the Michigan Sierra Club

A report from The Center for Public Integrity (http://www.publicintegrity.org/2015/11/09/18693/only-three-states-score-higher-d-state-integrity-investigation-11-flunk) ranks Michigan last in terms of government transparency, ethics, and integrity. Many say that this (http://michiganradio.org/post/where-does-michigan-rank-state-integrity-investigation-dead-last#stream/0) report is the result of money slowly driving the shadowy aspects of our government’s decision making. Michigan has become so weak on transparency and disclosure that the voices of ordinary people are being drowned out by special interests, corporate polluters and lobbyists. This ranking is an embarrassment to the state that I am so proud to live in. This is not a government of the people, by the people, and for the people.

I wasn’t surprised to find out this ranking because I've seen first-hand that the United States political system is dominated by money more than ever before. This makes it unsurprising to see more and more secrets spill over Flint’s water issues, and seeing no movement on the dangerous Line 5 pipeline that could destroy the Great Lakes. The state allowed Flint to add the wrong chemicals to drinking water pumped from the Flint River. That failure allowed the more corrosive river water to leach lead from the city's aging pipes and through faucets throughout the city. Tens of thousands of people were exposed to lead poisoning, which will have irreversible effects on the city's children.

Flint's water crisis is the product of ethical failures and prolonged inaction by the Michigan Department of Environmental Quality, the U.S. Environmental Protection Agency, Governor Rick Snyder's office, and the City of Flint itself. This leads to another difficult question: when something goes horribly wrong, how does government police itself? What's required is accountability: not just to get mad and lay blame, but to ensure that nothing like this ever happens again. At the very least, we need to vote for elected officials who will not tolerate environmental negligence.

Friday, October 16, 2015

Tobacco, Firearms and Food

an old article but as pertinent as ever

Let’s say your beliefs include the notion that hard work will bring good things to you, that the golden rule is a nice idea though it may occasionally have limits, and that it’s more or less every person for him or herself. Your overall guiding force is not altruism, but you’re not immoral; you’re a good citizen, and you don’t break any major laws. This could describe many of us; most, maybe.
Now suppose you’re in the business of producing, marketing or selling tobacco or firearms — products known to sometimes kill others. You need not be a corporate executive or a criminal arms dealer; you might be a retailer of cigarettes, a person who sells them along with magazines, a marketer, a gun shop owner. In any case, your conscience is clear: you’re selling regulated legal products and, as long as you’re obeying the regulations, you’re doing nothing illegal. (“Wrong” is a judgment call.)
You sleep well, believing that the government would further regulate your product if it were necessary. And if regulations were to change, you’d change with them. But to act otherwise — to hold back your energy from production or sales just because of moral or social pressure — would be foolish, and put you at a competitive disadvantage.
For many years after knowing about the lethal nature of tobacco, our government did little or nothing to limit its consumption. That’s changed gradually in the last 50 years, and more dramatically since 1998, because of successful lawsuits and because the Food and Drug Administration often tries to pursue its mission. (For a variety of reasons not worth going into, firearms are more challenging to regulate. Let’s leave it at that for now.)
O.K., so suppose we pass legislation that discourages you from producing or selling tobacco or firearms while at the same time actively encouraging you — supporting you — to change to producing apples or cotton or washing machines or screwdrivers; as long as you could see a way to increase profit, you’d probably look at the new opportunity. After all, it’s not as if you want to produce agents of death. You want to make the best living you can selling stuff that’s legal and that people want. Markets change, and flexibility is important, and the government can and does affect your business, even if it’s by inaction.
Now let’s apply this same way of thinking to the major food categories — and for the purposes of this discussion there are only three — and what it’s like to be a farmer or producer, or a manufacturer, processor, distributor, retailer of this stuff. Again, you’re agnostic about what you sell, but you’re profit-conscious. And the government can and does affect your business; it can help your business (“you didn’t build it yourself”) or hurt it, as it should if your business is harming others.
Let’s call the first food group industrially produced animal products. Producing and selling as much as possible is the way to go here, since the penalties for damage your product does to human and animal health and to the environment (including climate) are virtually nonexistent. You can treat the animals as you like and damn the consequences, from salmonella contamination to antibiotic resistance to water contamination to, of course, cruelty. There are even incentives, in the form of subsidized prices for animal feed.
The next group is most easily labeled junk food; you might call it “hyperprocessed.” This comprises aisles and aisles of “edibles” sold in supermarkets and restaurants, and is often “food” that’s unrecognizable as such, ranging from soda and other sugar-sweetened beverages to things like chicken nuggets and Pringles and tens of thousands of other examples. These are mostly made from commodity crops, especially corn, soybeans and wheat. Federal subsidies abound in many forms here, from direct payments (in theory, these are ending, to be replaced by a bizarre form of crop insurance) to the ethanol mandate to virtually unregulated land use that permits toxic overapplication of fertilizers and other chemicals. There is also that same failure to recognize the public health and environmental costs of what is probably the least healthy diet a wealthy nation could devise. You could even say that the Supplemental Nutrition Assistance Program (SNAP, usually called food stamps) acts as a subsidy to junk food, since nothing limits using food stamps for food that promotes disease. It’s worth noting that for the past century the bulk of university research, much of it paid for with tax dollars, has gone into figuring out how to increase the yield of the crops and processes that turn out this junk that sickens.
Then, in the third group, there’s everything else, from fruits and vegetables — absurdly called “specialty crops” by the Department of Agriculture — to animals raised in sustainable and even humane ways. But here, disincentives abound: farmers may be encouraged to allow some land to go fallow, but not to be planted in specialty crops, and research money, subsidies, insurance, market promotion and access to credit are directed toward industrial food production, distribution and sales. These inefficiencies make most of this real food, which is health-promoting and closer to environmentally neutral, appear to be more expensive. (Only “appear,” though. If you account for the costs of environmental and public health damage, industrially produced junk food and animal products actually cost more.)
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Thursday, October 15, 2015

My First Time at Sierra Club's Citizen Lobby Day by Kevin Duffy

The Sierra Club Michigan Chapter’s Citizen Lobby Day is one of our marquee events, where members converge in Lansing to educate lawmakers about important environmental issues. Our goal is to empower people to have a voice at the capitol and hold lawmakers accountable for their environmental votes. On October 14, over 65 environmental activists from every corner of the state came together to fight for progressive clean energy policies and to advocate for a ban on fracking. What follows is a personal reflection on the event from Kevin Duffy, our Communications Intern who had never before lobbied a lawmaker.

My First Time at Citizen Lobby Day
Kevin Duffy

A former environmental journalist, my first experience at Citizen Lobby Day was not what I had imagined. Of course, what I had imagined was battling the same disconnect I felt as a writer who was rarely granted a timely interview. It was not at all like that. I vigilantly shadowed a day’s worth of meetings with state Representatives and Senators, not one of them late (another surprise). The opportunity offered by the Sierra Club not only remedied the detachment I previously felt, it offered direct government engagement. Further, it reinforced my understanding of the issues – clean energy, hydraulic fracturing – and empowered me (as I imagine others) to take the policy plunge. It also allowed me to chase the environmental cause with force, Sierra Club providing the materials I needed – materials I also happen to support.

A well-organized event, I never felt lost in discussion and was motivated by the turn out. The number of available legislators alone motivated me to take action. Other citizen lobbyists spoke on their expertise including a wide range of backgrounds such as first-responders, a church youth group, professional educators, solar home owners, and well-informed activists. There were many understandings and perspectives to share, but a collective voice spoken. Sierra Club defended the definition of renewable energy, fought for fair access to solar, emphasized Michigan’s dependence on clean freshwater and demanded accountability on companies who frack for natural gas in the Great Lakes state.

Activists Suzanne Love, Steve Rall, Dave Errickson and Dawn Flemming 
met with State Representative Tom Barrett (R-Grand Ledge).

Most of the issues are not inherently polar – the right to a healthy body and environment – but competing positions related to policy and political affiliations have a tendency to make issues that exactly. However, that’s where I gained most useful insight. Even Representatives or Senators who historically rejected the importance of issues I valued could show an understanding and in turn build an open narrative. I was not alone in thinking this. Speaking to other participants, I learned how some hesitated to enter a potentially edgy meeting and others who hoped for belligerent debates. In either case (and all those in between), everyone seemed pleasantly surprised by at least one or two points of conversation with their elected officials. Whether or not that meant they could support the legislator’s position or bill, it again opened a valuable dialogue – one that requires active or repeated participation. I learned that you can affect someone’s position on the environment. I know my Citizen Lobby group did.

State Representative Sam Singh (D-East Lansing) took time to meet with Sierra Club members Rob Zimmer, Diane Moore, Lindsey Diamond, Bill Rittenber and Mark Meadows.

Wednesday, October 14, 2015

Flint water crisis: failure of Michigan government

Thursday, October 1, 2015

Sierra Club Submits Testimony Opposing SB 437: Destructive Energy Legislation

The Sierra Club Michigan Chapter submitted the following testimony to the Senate Energy and Technology Committee in response to Senate Bill 437 on Wednesday, September 30.

Comments on SB 437

September 30, 2015

To: Chairman Nofs and members of the Senate Energy and Technology Committee

RE: Senate Bill 437

On behalf of our 60,000 members and supporters in Michigan, the Sierra Club expresses our opposition to SB 437 (Nofs) and urges substantial amendments to the bill language to address its significant flaws. SB 437 would establish a revised integrated resource planning (IRP) process as a substitute for Michigan’s current renewable energy and efficiency standards. The IRP process created by SB 437 is intended to fill in the gaps in its companion bill, SB 438, which would eliminate Michigan’s renewable energy portfolio requirement and sunset its energy optimization program. IRP processes, and in particular the utility-driven approach contemplated by SB 437, are not effective replacements for clean energy standards. Instead, to achieve clean energy goals, integrated resource planning needs to be conducted in conjunction with clear standards and incentives.

In Michigan, residents have realized many benefits of mandated clean energy standards since the passage of Public Act 295 in 2008. Those enforceable standards  created jobs, saved ratepayers money, and enhanced economic development, while simultaneously protecting the health of Michigan’s citizens by reducing the use of dirty and costly fossil fuels in our energy sector. Now is the time to increase Michigan’s clean energy standards, not to gut them. Our own state agencies, as well as nationally acclaimed energy experts, have demonstrated that our state can dramatically increase its renewable energy and efficiency capacity while boosting our economy and protecting our environment.

Even if Michigan’s current standards remained intact, or were improved as recommended in Sierra Club’s August 15th letter to this Committee regarding SB 438, the IRP process in SB 437 suffers from several flaws. To more fully maximize the benefits of integrated resource planning, and to ensure a clean energy future, the IRP process must, at a minimum: engage stakeholders early and in meaningful ways; provide for the fullest possible consideration of clean energy and energy efficiency technologies; require utilities to engage in robust modeling; and assess compliance costs with all reasonably expected future regulations, in addition to applicable laws. In SB 437, the process falls short on many of these issues. Michigan legislators should amend or reject SB 437 because it would undermine Michigan’s progress to date and put our future at risk.

An IRP process alone will not drive energy efficiency

An IRP process can be a strong complement to a robust energy efficiency program, but it is not an effective replacement for one. In December 2014, the American Council for an Energy-Efficient Economy (ACEEE) reported a striking difference in efficiency spending and savings between states with standards and those without, regardless of whether the state had an IRP requirement in place[1]. The researchers found no statistically significant difference between efficiency spending or savings between IRP and non-IRP states without standards, while states with efficiency standards had three times the amount of spending and savings as those without. This analysis has been borne out in Michigan, where the MSPC estimates that customers save close to $4 for each $1 invested by the utilities.[2] Moreover, Michigan’s energy efficiency industry employs more than 46,000 Michiganders, and contributes 2.3 billion to our economy[3], all while reducing greenhouse gas emissions.

Sun-setting our successful energy optimization standard puts these savings and this economic sector at risk. At present, utilities have a strong disincentive to engage in customer energy efficiency programs, as higher sales of energy lead to higher utiltity revenues. While SB 437 provides for decoupling of utility profits from sales, which can neutralize the disincentive for efficiency, decoupling does not create a financial incentive to save energy that is comparable to the incentives that exist for investment in new capital assets like powerplants. Neither will the IRP process create such an incentive.

As written, SB 437 requires that utilities only show that their submitted IRPs are “least-cost,” without regard to the benefits offered by new clean energy or energy-efficient technologies. Moreover, under SB 437, the Michigan Public Service Commission (PSC) would only be tasked with evaluating energy savings that are “technologically” and “economically” feasible at a fixed moment in time[4]. It does not appear to be required to model higher levels of efficiency investment, nor, with the elimination of the EO program, would it consider any minimum level of energy efficiency. This contravenes several best practices that have been identified for the integration and encouragment of cost-effective energy efficiency measures[5]. With essential improvements, and the preservation of our energy optimization program, an IRP process could be step in the right direction. In its current form, however, SB 437 and its companion legislation will negatively impact a cost-effective measure that has decreased customer rates and reduced energy waste.

Creating “flexibility” does not require the repeal of renewable energy standard

Some supporters of SB 437 and SB 438 justify their proposal with an ideological opposition to mandates, and view this legislative package as restorative of market forces. These bills place Michigan’s energy future solely in the hands of the IRP process by invoking a need for flexibility. It is worth noting that utilities are not players in a free market; they are government-granted monopolies that enjoy guaranteed profits. It is not unreasonable to require them to reduce waste and invest in clean power.
The current renewable energy standard – which requires utilities to generate at least 10 percent of their electricity from renewable sources – can hardly be said to limit flexibility. Moreover, it has been a boon for our economy and residents. Since it was enacted in 2008, it has driven down the cost of generating power and delivered $2.9 billion[6] in new investments in Michigan. It’s also been a big job creator; our state added 3,600 clean-energy jobs in 2014 alone.[7]
The fossil fuel industry, on the other hand, received $502 billion in overall subsidies from U.S. taxpayers in 2012, according to a report from the International Monetary Fund. In comparison, the renewable energy industry (excluding biomass) received $24 billion in federal support in 2012, less than five percent the subsidization of fossil fuels. In addition, the International Monetary Fund recently reported that fossil fuel pollution costs the world $5 trillion annually in public health and environmental problems. Pollution costs are externalized from the market and are another form of fossil fuel subsidization, balanced out by costs to people’s health and degradation to our natural resources. For example, right here in Michigan a 2011 report from Environmental Health and Engineering, Inc. showed that particulate matter pollution (PM2.5) from Michigan’s nine oldest coal plants are costing $5.4 billion a year in public health costs.

Under SB 437 and SB 438, the renewable portfolio standard (RPS) would be replaced with an IRP which does nothing to correct the over-subsidization of fossil fuels or to internalize pollution and public health costs into electric generation costs. The IRP should be complemented by an RPS, especially since renewables are cheaper[8] than new conventional power generation. An IRP alone will not result in substantial progress toward renewable energy development.

SB 437 and SB 438 fail to appreciate the dangers of climate change

Combined, SB 437 and SB 438 make for a dangerous proposal that takes Michigan in the wrong direction when it comes to protecting our state from climate disaster. Climate disruption caused by greenhouse gases from human sources is an urgent threat to our everyday lives and our future, and its impact is already being felt in Michigan. Climate disruption is about more than warmer temperatures – it’s about disrupting the basic weather patterns that affect almost everything in our lives - our water supplies, how we grow our food, the kinds of diseases we deal with, and the ability to keep our families safe.

We can already see the effects of climate disruption all across America: unprecedented droughts and wildfires in Western states, record-breaking heat in the Southwest and Midwest, Hurricane Katrina and Superstorm Sandy, extreme winter weather in traditionally warm states, and melting glaciers in Alaska and Montana. Extreme weather events are becoming more frequent, harming people, their economic well-being, their health, their homes, and their futures. Right here in Michigan, we’ve seen cherry and apple crops completely devastated due to abnormal and extreme weather patterns exacerbated by climate disruption. The time to fight climate disruption is now, but enacting SB 437 and SB 438 would contribute to more climate disasters.

Sierra Club members call on our elected leaders to combat climate disruption by moving Michigan beyond fossil fuels and towards true clean energy sources like wind, solar, and energy efficiency. According to a Yale study from last year, 61% of Michiganders believe climate change is happening, 76% believe we should regulate carbon pollution, and 60% support increasing our state’s renewable energy standard.  The message is clear: Michiganders oppose the legislative package of SB 437 and SB 438 and want clear metrics for renewable energy and efficiency instead.

Sierra Club’s Policy Recommendations

The IRP process established by SB 437 cannot, on its own, provide for a clean energy future in Michigan. It is not a sufficient substitute for Michigan’s current renewable energy standards or energy optimization program. We reiterate our recommendations for those mandates from our August 15th letter regarding SB 438 here because they relate to SB 437 as well:

·         Increase Michigan's renewable energy standard to 30% by 2030, as the Public Service Commission and Energy Office have reported is readily achievable.
·         Increase Michigan's energy optimization standard from 1% to 2% annually.
·         Remove the existing spending cap on Michigan's energy efficiency program.
·         Ensure that "clean" or "renewable" energy is not redefined to include anything that emits greenhouse gasses or creates radioactive waste such as fossil fuels, nuclear energy, or energy from incinerating wastes.
·         Ensure that electric ratepayers are able to produce their own energy, either to use for themselves or sell back to a utility company at full retail price, not a wholesale or lowered price.
·         Remove the existing cap on net metering and all other regulatory barriers to distributed generation.

In addition, we offer the following specific recommendations on SB 437:

·         The Public Service Commission should evaluate IRPs based on the reasonableness of costs and rate impacts in consideration of the benefits offered by new clean energy and energy-efficient technologies and give its fullest consideration to those technologies, rather than evaluating utility IRPs simply on the basis of “least-cost.”[9]
·         The Public Service Commission and utilities should consider environmental compliance costs with all reasonably expected future regulations, not only those formally proposed or published in the Michigan Register or Federal Register.[10]
·         The IRP process should provide for early and meaningful stakeholder engagement, both in the Public Service Commission’s development of statewide parameters for IRPs and the utilities’ planning process, rather than providing only for responsive comments and contested case hearings (respectively).[11]
·         Require use of levelized cost-curves for demand-side resources, including energy efficiency, that are comparable to the levelized cost curves for supply side resources.
·         Utilize credible load forecasts by requiring load modeling to address a range of possible load forecasts, not just the most likely forecast (e.g. a high-growth and low-growth forecast as alternatives to the reference case).
·         The IRP should be constructed in a way that internalizes environmental pollution and public health costs. These costs are currently externalized from the energy market and get passed onto individuals, health institutions, and others impacted by environmental pollution.
·         Require utilities to use and document simulation models that evaluate the cost and risk of multiple possible resource portfolios under numerous future scenarios before arriving at a plan.

For these reasons, we urge you to vote NO on SB 437, or if it goes forward, to amend the bill to strengthen the IRP process in the ways enumerated in this letter. Votes pertaining to this bill will be included in the Sierra Club’s legislative scorecard.


Mike Berkowitz
Legislative and Political Director
Sierra Club Michigan Chapter

[1] http://aceee.org/blog/2014/12/irp-vs-eers-there%E2%80%99s-one-clear-winner-
[2] Michigan Public Service Commission, 2014 Report on the Implementation of P.A. 295 Utility Energy Optimization Programs, November 2014.
[3] Michigan Energy Innovation Business Council and 2013 Michigan Workforce Agency Energy Cluster Analysis
[4] SB 437, page 26, ll. 23-25.
[5] State and Local Energy Efficiency Action Network, Using Integrated Resource Planning to Encourage Investment in Cost-Effective Energy Efficiency Measures, September 2011.
[6] http://awea.files.cms-plus.com/FileDownloads/pdfs/Michigan.pdf
[7] http://cleanenergyworksforus.org/wp-content/uploads/2015/03/2014_Q4_Report_FINAL.pdf
[8] http://cleantechnica.com/2015/06/09/cheap-michigan-wind-energy-set-save-consumers-15-million-annually/
[9] See SB 437, p. 28, ll. 11-13.
[10] Id. at 26-27, ll. 26-27, 1-5.