Michigan Chemistry Council Energy Policy Agenda

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The Michigan Chemistry Council (MCC) is the primary association representing chemical manufacturers and associated firms in the state. Chemistry is our state’s third-largest manufacturing sector, and our companies support nearly 120,000 Michigan jobs and generate $127 million in state and local taxes. Energy is perhaps the most significant issue of concern for the chemical industry, as our members greatly depend upon reliable and affordable energy sources for their feedstocks and manufacturing processes.

Unfortunately, our members remain significantly disadvantaged by our state’s costly energy. Michigan’s industrial electric rates are the highest in the Midwest, and are among the highest nationwide. Our state’s current energy policies are a major barrier to continued growth by our industry, which competes not only nationally, but internationally for new investments.

Competitive Energy Costs

The MCC strongly supports policies that will advance energy affordability and reduce the cost of doing business in Michigan. It is increasingly clear that regional transmission authorities like MISO can help deliver adequate electrical capacity and ensure the necessary reliability for our state’s future without our having to shoulder all these needs alone. Given this “new energy reality”:

The MCC believes that all energy solutions should be allowed to compete on a level playing field with competitive bidding for the construction, ownership, and operation of any new electrical generation. Likewise, MCC supports continued retail competition in the electric market as a customer-driven method of controlling costs and improving utility performance.

In addition, effective regulatory oversight must be a necessary complement of cost control. Electric rates should be based on true cost-of-service principles using actual costs. Further, the MPSC should make a final determination on any proposed rate increases before their use. Utility decoupling mechanisms, surcharges and trackers should also be eliminated. Utilities should be required to issue refunds accurately on a per customer basis. Finally, where it is cost-effective for customers, securitization should be used as a tool to address the cost of existing plant retirements.

The MCC believes that while Michigan will face its own energy challenges in the coming years, we have the solutions available to meet these challenges in a responsible and cost-effective way.

Energy Efficiency

The MCC is a firm believer in the Governor’s “No Regrets” energy vision that focuses heavily on the elimination of energy waste. Michigan’s chemical manufacturers not only produce innovative energy-saving products for worldwide markets, but have long been leaders in improving industrial energy efficiency and reducing their own energy consumption.

The MCC therefore supports giving industrial users the ability to opt out of mandatory utility-driven energy optimization programs, which provide more value to small commercial or residential customers that benefit from such expertise and rebates. For those customers who wish to participate in energy optimization programs, the charges should be on a “per meter” basis and not based upon a skewed measure of user volume. The MCC also supports the elimination of unnecessary utility energy optimization “bonuses” paid out of funds allocated for energy optimization projects.

Lastly, the MCC supports the continued adoption of current versions of residential and commercial energy codes and the incorporation of these energy efficiency standards in state building and remodeling projects.

Clean Energy

The MCC recognizes the importance of developing clean and renewable sources of energy, and the increasing economic viability of such technologies. As such:

MCC supports policies to consider clean energy sources on a level playing field with traditional forms of electric generation, taking into account the full range of environmental and economic factors. The MCC would be cautious of any new or increased mandates that favor certain technologies over others and are not cost-competitive.

Michigan’s approach to clean energy should also allow for innovative new energy recovery methods, and should make use of competitive bidding for the development of any additional generation resources. Additionally, the MCC supports policy reforms that would foster greater use of clean energy by allowing users to access generation directly from independent sources and enabling increased self-generation.

Finally, the MCC supports the elimination of the current “in-state” RPS preference that unnecessarily drives up costs and excludes viable and cost-effective clean energy resources from other areas.

These changes can help Michigan increase its use of clean energy resources without saddling our employers and residents with steep rate hikes.

An Adaptive Michigan Energy Policy

As Michigan develops its plan to comply with federal EPA greenhouse gas rule requirements, we believe that our state can meet these goals without killing jobs or hurting economic growth. Michigan can and certainly should make better use of both energy efficiency and competitive renewable sources to reduce our carbon intensity. It is also important to have an open stakeholder process that gives utility customers the opportunity to participate in the development of these long-term policies. Furthermore, individual customers and ratepayers—not utilities or governments—should maintain ownership of their energy efficiency program credits and achievements.