Oct. 27, 2023 | This Week in Government: Renewable Mandate Clears First Hurdle

Democrats took a key step in passing one of their top priorities with the Senate’s approval of a quadrupled renewable energy mandate on Thursday, with Republicans sharply critical of the move they say would result in higher utility bills and diminished grid reliability.

Democrats said the proposed changes in the three-bill package would help foster a transition to a renewable energy future and cleaner environment while having Michigan do its part to address climate change.

On Thursday, Republicans made their displeasure with the bill’s process and contents abundantly clear, accusing the Democrats of abandoning the decades-long tradition of bipartisan deliberative work on energy policy.

Members voted 20-18 along party lines Thursday on SB 271, SB 273, and SB 502, the first overhaul of the state’s energy policy since 2016. The bills contain sweeping changes, with the key measure requiring a 100% clean energy portfolio by 2040.

The many changes in the bills appear to be an attempt to strike a balance between the different interests in play. While there is a renewable mandate, there are also avenues for utilities to delay meeting the requirement. Other provisions in the legislation stipulate regulators must be involved in environmental justice in certain decisions.

The majority of Democrats are attempting to tread a path that satisfies traditional environmental organizations, utilities organized labor, and the environmental justice community, three entities with different priorities and focuses.

“This legislation marks the beginning of taking bold action to address this urgent crisis,” said Sen. Erika Geiss (D-Taylor), one of the bill sponsors. “The cost of doing nothing is dire and detrimental to the health and welfare of our state and her people. Clean energy legislation is crucial in combatting the climate crisis.”

Following the session, Republicans, in comments to reporters, also accused Democrats of seeking to ban natural gas.

Senate Minority Leader Aric Nesbitt (R-Porter Township) said the bills were pushed through without public vetting or time to review the changes made in the past 24 hours.

“What the Democrats are ramming through on these mandates are just not going to work for Michigan working families, businesses and manufacturing, and it’s just going to double down on some of these policies in other states that will drive more manufacturing jobs out of the state,” Nesbitt said.

Debate on the bills came barely 24 hours after substitutes were offered before a Senate committee for adoption and reported, including wholesale changes to what was originally introduced in the spring (See Gongwer Michigan Report, Oct. 25, 2023).

Work has happened behind the scenes between lawmakers and stakeholders. On Thursday, that continued, with further changes adopted in floor substitutes shortly before the debate on the bills began.

Sen. Dan Lauwers (R-Brockway) said the goal for many Democrats under the bills is to eliminate petroleum.

“We’re not in a position to live without petroleum, everything you’re holding in your hands right now is petroleum-based,” Lauwers said, pointing to reporters’ phones and recording devices.

Nesbitt agreed.

“No matter what they talk about, no matter what their talking points, they want to abolish natural gas, even though it’s a low-cost, good energy production,” Nesbitt said.

House Minority Leader Matt Hall (R-Richland Township) told reporters he believes the Democratic caucus in the House is divided on the issue, saying their leadership will not be able to get a bill package to the governor’s desk without Republican support.

“And we won’t support anything that bans natural gas,” Hall said. “We need affordable and reliable energy, and natural gas is the most reliable source in our state.”

Hall said he welcomes bipartisan talks on energy legislation in the chamber and added he believes siting authority of large renewable energy projects will also not be able to get through the House.

When asked about the use of carbon capture technology outlined in the bill, Nesbitt said there is nothing that sets up a method for companies to utilize the technology in the bills, with Hall labeling it a way to ban natural gas.

Sen. John Damoose (R-Harbor Springs) said Democrats will leave Lansing believing they were collaborative on the energy legislation and are somehow pro-energy and pro-business. He said that is inaccurate.

“What they just did today is … voted for one of the most radical energy policies in the history of the world, and I hope people can see what they’ve done,” Damoose said.

When asked by reporters what effect the bills would have on ratepayers, Sen. Sam Singh (D-East Lansing), one of the bill sponsors, pivoted to federal monies provided to the state for renewable energy initiatives that he believes will help address the costs of a renewable energy transition.

“We’re going to be bringing billions of extra dollars back to the state of Michigan to be able to move this clean energy program forward,” Singh said.

Singh added that the ability for utilities to apply to obtain delays in meeting the renewable standards, referred to as “off-ramps” by bill supporters for showing need to be unable to reach benchmarks can help prevent the mandates from become too costly.

He pointed to DTE Energy Company in a settlement with the PSC earlier this year, moving to shut down one of its coal-fired power plants, which he said would save ratepayers millions.

“Renewable energy has gotten to a point now that it’s so cost-effective that those types of decisions as we go forward, we’re going to see a lot of that,” Singh said.

Singh told reporters there have been ongoing conversations with House members and stakeholders, and his hope is quick movement in the other chamber is possible.

Floor substitutes were adopted prior to final passage of all three bills: S-3 substitutes for SB 271 and SB 273 and an S-6 substitute for SB 502.

The substitute for SB 271 language specifies the 15% renewable energy standard is through 2029, correcting an apparent oversight in the S-2 reported by the committee that left 2028-29 unaddressed for their renewable standard. Municipal utilities would also be allowed to use renewable energy credits in excess of 5% to comply with the renewable portfolio standards.

The first renewable energy plans filed by companies would be a 300-day process, with the process scheduled for 180 days in subsequent filings of plans.

The PSC would have 270 days to issue a final order in cases of renewable energy reconciliation proceedings.

The renewable energy resource definition would be amended to include, as related to biomass, “trees and wood used in a renewable energy system that are placed in commercial operation after the effective date of the act, but only if derived from sustainably managed forests or procurement systems.”

Plastic and post-use polymers would not be included in the list of renewable energy resources.

Any renewable energy credits reported by customers and used by a provider would have to be equal to the customer’s proportional share of the renewable portfolio standards for the year in which the credits are retired. The customer would then provide an update on their five-year forecast on the expected amount of the credit to be used for compliance for the coming year.

Under the substitute to SB 273, technical language changes were made to the incentive targets language for natural gas providers.

Another change was in language dealing with energy workforce and contractor development. The language was amended to directly refer to transition impacted industries.

It states that workforce and contractor development efforts would focus on the hiring and development for energy waste reduction careers, workers in or from low-income communities, and workers formerly employed in transition-impacted industries. Development would be tasked with using generally recognized best practices.

For SB 502, there were considerable changes to beef up the environmental justice language.

The definition of environmental justice was moved to a different section of the bill, and an environmental justice community would be defined by the Public Service Commission Track in consultation with the Department of Environment, Great Lakes and Energy, and the Office of the Environmental Justice Public Advocate.

Further language for an Integrated Resource Plan modeling of electrification was changed to conducting an assessment of the potential for electrification of transportation, buildings, and industries aligned with the elimination of greenhouse gas emissions. This would be based on what is economically and technically feasible as well as reasonably achievable.

Requirements for an Integrated Resource Plan would now have additional items, including that a review of reasonably anticipated environmental justice impacts must be provided for new natural gas facilities. A review of the reasonably anticipated environmental justice impacts of generation facilities would also be required if they include one or more fossil fuel peaking plants.

Under the Integrated Resource Plan language, “reasonably anticipated environmental justice impacts” would include effects on the environment, human health, and economic and social impacts.

For an IRP, affordability would have to be included in its filing involving customer rates, and the PSC would also have to consider affordability and overall cost-effectiveness in providing utility service.

Thursday’s changes are in addition to changes adopted Wednesday by the Senate Energy and Environment Committee that included moving the 60% renewable energy standard back from 2032 to 2035, raising the distributed generation cap from 1% to 10%, making changes to the energy waste reduction requirements and goals with incentives and requiring the prevailing union wage for workers building new energy facilities.

Between the three bills, Republicans offered more than 20 total floor amendments, all of which were rejected along party lines.

Prior to the votes on the bills, GOP members laid into the proposals as being unfeasible and destined to drive up utility bills.

Sen. Jim Runestad (R-White Lake) said the proposal was slapped together behind closed doors without input from the business community or Republicans.

“Apparently the current majority of this Legislature has looked at the fact that Michigan has the highest energy costs in the Midwest and has decided, ‘you ain’t seen nothing yet, you’re going to be blown away,’” Runestad said.

Sen. Mark Huizenga (R-Walker) said as someone who supports renewable energy efforts, he could not support the policy before the chamber.

“Make no mistake, this bill will raise the energy costs for those families in need,” Huizenga said. “We should be doing more to lower costs, not raising them today or any day.”

Sen. Joseph Bellino (R-Monroe) also called the policies irresponsible.

“As families and communities continue to pay more for virtually everything, we need to give them realistic and effective solutions that will increase energy reliability and reduce costs,” Bellino said. “This plan doesn’t achieve either of those goals.”

Lauwers called the package the latest move under the Democratic majority of pushing a major policy change that would have long-term negative effects.

“We’re about to vote on legislation that will impact the people of Michigan for years and years to come but was thrown together for a vote in a matter of weeks, without considering if they’re even feasible,” Lauwers said. “We’re about to vote on legislation that was pushed forward in a showcase of partisan power with no regard for bipartisan scrutiny or collaboration, and quite frankly, legislation that was crafted with what seems without real concern for the effects it will have on the state.”

Democrats took an optimistic tone on the bill package and what the changes could do for the state.

Senate Majority Leader Winnie Brinks (D-Grand Rapids) called the bill package a first step in addressing climate change that the public has asked for.

“These bills aim to make energy more affordable, our grid more reliable, and our state cleaner and a more sustainable place to live while improving equity and health,” Brinks said.

Governor Gretchen Whitmer, in a statement, called the bill package a big deal for Michigan families and workers.

“These bills will balance reliability and affordability and help us protect our air and our water and improve public health,” Whitmer said. “They will help us bring home more cutting-edge manufacturing investments so that we can make solar panels, wind turbines, and more right here in Michigan, supporting good-paying jobs, high-skill jobs that are a ticket to the middle class.”

Several groups issued statements supporting the bills following Senate passage.

A coalition of eight groups signed a joint statement calling the proposals critical to helping the transition to renewable energy and a healthier environment.

“Although the legislative process creates a give and take in negotiations, at the end of the day, this package of bills advances clean energy goals because it sets a much higher, yet achievable and binding, renewable energy standard than current utility plans,” the coalition said. “Without these bills, Michiganders would continue to pay the highest rates for the worst service in the Midwest.”

Michigan League of Conservation Voters Executive Director Lisa Wozniak said Democrats moved major legislation containing kitchen table issues residents support, including job creation and lowering energy bills.

“This package represents important and significant progress and makes Michigan a regional partner in the fight to address climate change in the Midwest,” Wozniak said.

But Amanda Fisher, Michigan state director for the National Federation of Independent Business, said small businesses do not have the margin to absorb the costs associated with the move away from traditional energy sources.

“This means that either small businesses must increase their prices or cease doing business – both of these options have repercussions that reach beyond the small business owner but include their employees and communities,” Fisher said.

 

Chamber’s Take: Brad Williams, vice president of government relations with the Detroit Regional Chamber, said there should also be a more deliberative process in crafting the energy legislation. He said over recent decades it has often taken multiple years, not several months, to complete major energy policy.

The Legislature spent two years on the 2016 energy law rewrite.

“It seems a bit quick to vote on bills that key stakeholders haven’t even seen yet today,” Williams said. “I think all of us would encourage stakeholders and policymakers to take the time to get this right as opposed to getting it done quickly.”

As the deadline to pass financial disclosure legislation ticks closer, the House has introduced a new bill package to implement the requirements of Proposal 2022-1.

The new package is identical to the Senate legislation introduced earlier this week and is sponsored by Rep. Angela Witwer (D-Delta Township), Rep. Tyrone Carter (D-Detroit), Rep. Will Snyder (D-Muskegon), and Rep. Carol Glanville (D-Grand Rapids).

The bills – HB 5272, HB 5273, HB 5274, and HB 5275 – don’t require financial disclosure for spouses and set late filing fees at $25 per day up to a maximum of $500. Those intentionally filing a false report would face a maximum civil fine of $1,000.”The bills…reflect discussions had with Senate leadership around meeting our responsibility to comply with the requirements of Proposal 1,” said Amber McCann, press secretary for House Speaker Joe Tate (D-Detroit) in a message on Thursday.

McCann declined to say if the new package would be the financial disclosure bills advanced through the House.

“I expect the speaker to work with the majority leader to deliver transparency to state government,” she said.

The bills were referred to the House Government Operations Committee on Thursday.

This is the second financial disclosure package introduced in the House in as many days.

Rep. Phil Skaggs of East Grand Rapids and Rep. Erin Byrnes of Dearborn introduced bills on Wednesday that go farther than the Senate package by requiring disclosure for a legislator’s spouse (See Gongwer Michigan Report, Oct. 25, 2023).

The House package introduced yesterday – HB 5248, HB 5249, HB 5250, HB 5251, HB 5252, HB 5253, HB 5254, HB 5255, HB 5256, HB 5257,

 and HB 5258– sets fines of $10,000.The legislation also would require disclosures from individuals running for and serving on state education boards and the reporting of a range of income. Information about immediate family members would also be required under the House bills.

Instead of the legislation being referred to a committee, the entire package was advanced to the Second Reading, which prevents any committee discussion or committee-led changes to the bills.

Bills repealing panels within the Department of Environment, Great Lakes and Energy that were designed to provide oversight on rules and permitting processes cleared Senate and House committees Thursday.

The Senate Regulatory Affairs Committee reported SB 393 and SB 394 along party lines. The bills would eliminate the Environmental Science Advisory Board and the Environmental Permit Review Commission, respectively. An S-2 version was adopted to SB 394, which made technical changes to references sections that would be deleted to prevent possible future confusion prior to the vote.

The House Natural Resources, Environment, Tourism and Outdoor Recreation Committee 

reported bills repealing the Environmental Rules Review Committee along party lines. HB 4826 would eliminate the committee, and HB 4824 and HB 4825 would update references to the committee in statute. The boards were established in 2018 when Republicans led the state government to be a check on the environmental agency. In the years since their creation, they have yet to necessarily serve as the check supporters sought and opponents feared.

Both committees took lengthy testimony during previous meetings about eliminating the oversight bodies (See Gongwer Michigan Report, Oct. 19, 2023).

SENATE REGULATORY AFFAIRS: The Senate Regulatory Affairs Committee also unanimously reported HB 4717. Bill sponsor Rep. Kristian Grant (D-Grand Rapids) said her bill would amend the Occupational Code to revise continuing education standards for realtors.

“This will ensure that they are trained on compliance with local, state and federal law for fair housing,” Grant said, adding that realtors only undergo initial training for fair housing law to get their license.

Three of the 18 hours of required continued education that realtors must complete every three years would be dedicated to fair housing under the bill.

Brad Ward, vice president of public policy and legal affairs for Michigan Realtors, testified in support of the bill. Ward said this legislation is a priority for the board because the challenges facing Michigan’s housing market also include making sure people have access to housing.

Legislation that would revive an income tax capture program and refocus the state’s larger economic development fund cleared a Senate committee on Wednesday.

The Senate Economic and Community Development Committee reported two legislative packages, one reviving the Good Jobs for Michigan Program, sunset in 2019, as the Michigan Strategic Tax Capture Program (SB 579, SB 580, and SB 581). The second package (SB 559, SB 560, SB 561, SB 562, 

and SB 569) would rename the Strategic Outreach and Attraction Reserve Fund the Make it in Michigan Fund, which would operate the Critical Industry Program and the Michigan Strategic Site Readiness Program. The bills would create the Michigan 360 Program, aiming to combine traditional economic development tools with targeted investments in housing, workforce development, education, wraparound services, and climate justice goals.

Projects under the 360 program would need to invest equal to 20% of the total investment toward those items. However, Sen. Mallory McMorrow (D-Royal Oak), the committee chair, said she would consider language to provide a “narrow” carveout for exceptionally large projects.

Still, she said Democrats don’t want to negotiate down the investment requirement.

The bills were reported with Democrats voting yes and Republicans either voting no or abstaining.

Substitutes were adopted to refine the bills, McMorrow said. The economic development fund legislation includes a host of criteria to be considered when determining what projects would get incentives from the state.

Generally, the bills seek to expand the focus of the economic development funds. The legislation includes a host of new criteria to be considered – though discretion would remain with the Legislature and the Michigan Strategic Fund Board 

to determine projects. The MSF would consider several factors when aiding projects. Some of those factors include the extent to which the project would use the local skilled workforce, the potential for environmental contamination that would be remediated and the plan for that remediation if a qualified business would support unionization, and what benefits the business would offer workers.

The bills also would require legislators to be appointed to the Strategic Fund Board 

as non-voting members. The Michigan Economic Development Corporation is neutral on the bills.

Under the Good Jobs Bills, the program would be renamed the Michigan Strategic Tax Capture Program. The new program would be limited to $100 million annually instead of $200 million for the life of the program, and it would end after five years. The MEDC supports this package.

The revamped program would allow tax captures for up to 10 years. Under the proposal, eligible businesses could keep up to 100% of income tax withholdings for new jobs. An eligible business would have to create either a minimum of 250 certified new jobs with a median annual wage equal to 150% or more of the prosperity region’s median wage or a minimum of 50 certified new jobs with a median annual wage equal to 175% of the region’s median wage.

The legislation would also require the MSF to consider if the expansion or location of the business would enable progress toward core policy priorities for community benefit plans, including engaging communities and labor and advancing diversity, equity, inclusion, and accessibility.

Jen Flood will take over as state budget director in November with Budget Director Chris Harkins leaving the administration, Gov. Gretchen Whitmer announced Wednesday.

Crain’s Detroit Business reported Harkins will take a finance-related job at Michigan State University.

Flood is currently deputy chief of staff in the Executive Office of the Governor, overseeing the legislative affairs, federal affairs, policy, appointments, and community engagement divisions. She previously was director of legislative and public affairs in the governor’s office.

She’s a former legislative aide who also worked as a lobbyist for the Dykema firm.

“Jen knows this job well and has what it takes to deliver,” Whitmer said in a statement. “She has been my point person with the Legislature and the Budget Office every year as we crafted and passed bipartisan budgets that put Michiganders first.”

Harkins was a coup when Whitmer landed him as budget director. A longtime Republican staffer who was director of the Senate Fiscal Agency at a time when the Senate was in Republican control, Harkins gave the administration someone with the credibility and experience needed to work with the Republican House and Senate majorities. And his knowledge of the state budget was deep.

Flood once worked for former Sen. Buzz Thomas, co-founder of Activate Detroit, when he was in the Legislature. He called Flood the perfect choice to lead the State Budget Office.

“I’ve known Jen for her entire professional career. She’s intelligent, empathetic, and always centers what is best for Michiganders in every decision,” he said.

Whitmer praised Harkins, saying his wisdom and leadership were pivotal at a time when the state had unprecedented surpluses in state revenues and federal aid.

Harkins will remain in his position until mid-November and then in an advisory capacity until mid-December, when he heads to MSU.

“Far from being just numbers the state budget is about the kitchen-table issues facing so many families,” Flood said. “It is an expression of the governor’s priorities and vision – not just today but for future generations. As a mom and life-long Michigander, this work holds special meaning to me. I look forward to working with chairs Sarah Anthony and Angela Witwer on future budgets to help empower our communities and show that anyone can make it in Michigan.”

The appointment is not subject to the advice and consent of the Senate.