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Report: 25 Percent Renewable Electricity Target Would Only Cost Michigan Consumers 50 Cents Per Month

By Stephen Lacey on October 3, 2012 at 2:00 pm

"Report: 25 Percent Renewable Electricity Target Would Only Cost Michigan Consumers 50 Cents Per Month"

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This year alone, Michigan’s two largest utilities have increased rates by more than 10 percent, adding between $9 and $11 to the average residential monthly utility bill.

So what would happen if Michigan voters approved Proposal 3, a ballot initiative that would increase the state’s renewable electricity targets to 25 percent by 2025? According to a group supporting the measure, rates would only rise by 1 percent — not in one year, but over the total life of the program.

That’s equivalent to about 50 cents on the average monthly bill.

That projection comes from a new report authored by two utility analysts and released by the Michigan Environmental Council.

The graph below illustrates what the rate impact may look like over the life of the program. In the first decade, the upfront cost of implementation may cause a minor rate increase of just over .5% (with a legal cap of 1%) — translating to roughly 50 cents per month extra for the average residential energy user. But after 2026, due to the projected cost decreases in renewable energy and projected cost increases in delivery of coal and natural gas, ratepayers start saving money:

If this is such a good thing for ratepayers, what’s the issue? Well, the state’s biggest utilities, Consumers Energy and DTE Energy, are heavily campaigning against it. That’s because Michigan gets about 59 percent of its electricity from coal — a resource that would likely see a substantial decline if renewable energy targets were increased.

That dependence on coal is a major part of the reason why Consumers Energy and DTE Energy continue to raise rates. According to this latest report, the cost of coal delivery to power plants in the state has jumped by 71 percent since 2006. Consumers Energy has projected fuel cost increases to total around $530 million over the next four years — resulting in a 3 percent rate increase each year.

This is also the reason why contracts for renewable energy are coming in less than the cost of new coal. In February, the Michigan Public Service Commission issued a progress report of the state’s current renewable electricity standard requiring 10 percent penetration by 2015, finding that the cost of wind, solar, and hydro “is cheaper than a new coal-fired generation” in the state.

In fact, on multiple occasions since 2008, Consumers Energy reported that the cost of meeting Michigan’s current renewable electricity targets has been far lower than expected. In May, the company reduced its renewable electricity surcharge by 13 cents. It also reduced the surcharge in May of 2011, citing the lower-than-expected cost of meeting targets.

It appears Michigan consumers — even if they don’t know the specifics of the costs of each technology — broadly support a shift to renewables. According to a poll conducted in September, 55 percent of registered Michigan voters said they would vote “yes” on proposal 3, the ballot initiative that would increase the state’s renewable electricity targets to 25 percent.

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2 Responses to Report: 25 Percent Renewable Electricity Target Would Only Cost Michigan Consumers 50 Cents Per Month

  1. Mark E says:

    No, the program will PAY Michiganders, not cost them.

    A Michigan landowner myself, I am very excited about this program. If one factors in a dollar value on the improved environment, local air quality, improved health (and reduced drains on medicare from lung ailments), jobs for building and operating the new infrastructure, and (most importantly) the payback from the overall economy when all those energy-buying dollars stay within the state…..

    …. this is a no-brainer. I pay plenty of real estate taxes to Michigan, and my only regret is that life’s demands forced me to move elswhere, so I can’t cast a YES vote on this initiative. To tweak the state slogan:

    Say “YES!”, Michigan!

  2. Ronald Brak says:

    Here in South Australia we get about a third of our electricity from wind and solar and because of their effects on electricity prices, starting next year I will be getting an 8.1% reduction in what I am charged for electricity.