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Energy Proposals Could Bring Higher Costs to Small Businesses

September 14, 2023

There are major overhauls to energy policy being proposed in both the Michigan House of Representatives and the Michigan Senate. The focus of SBAM’s energy policy is on the reliability and affordability of electric and gas services that our members rely on to operate.

The apparent goal of the proposed legislation is to eliminate carbon emissions. SBAM does not oppose such efforts, so long as they do not reduce reliability or increase the costs of electricity used by small businesses. Legislative proposals in both the House and the Senate would likely do both. We urge an approach that balances carbon emission reduction goals against cost and reliability factors and ask that regulations not rely on technologies not yet available.

A renewable energy standard that is too narrowly defined, bans most natural gas plants, raises costs, and lowers reliability.

Michigan’s utility companies have been aggressively moving toward more renewable energy sources and have substantially reduced carbon emissions. Furthermore, they have legally committed (through their Integrated Resource Plans) to net zero carbon emissions in the future (Consumers Energy by 2040 and DTE by 2050).

Current legislative proposals are rigid, go beyond reasonable timelines, and ban most natural gas plants used for baseload and peaking generation. Renewable energy from wind and solar have proven to be important sources of electricity generation, but when the wind isn’t blowing and the sun isn’t shining, natural gas peaking power plants are invaluable tools.  Aggressive mandates for battery technology could unnecessarily drive-up costs. Natural gas baseload and peaking plants are what make it possible to rely so heavily on wind and solar generated electricity without causing higher costs and lower reliability.

Energy Waste Reduction (EWR) mandates

SBAM has worked closely with utility companies large and small to help small businesses lower costs through energy waste reduction programs. While these programs have proven successful, it is important to recognize that their costs are included in the rates small businesses pay. Pushing EWR mandates higher ignores the fact that so much energy waste has already been eliminated by individuals and businesses alike. The “low hanging fruit” is gone. It means increased EWR mandates will cost more and save less. That defeats the purpose. To achieve such goals, we fear that state government will further regulate the how and when business owners use energy in their businesses.

A shift in power to political appointees on the Public Service Commission

The Senate energy bills significantly expand the power of political appointees on the Public Service Commission (PSC). It essentially turns the PSC into an additional environmental regulatory agency in addition to the existing environmental regulatory agency we already have. This body would be able to make what amount to managerial decisions for private businesses with respect to energy. Furthermore, these changes would neuter the Integrated Resource Plan process, which is the main way energy users, such as small businesses, can weigh in on everything from how energy is produced to costs to reliability issues.

As currently drafted, SBAM opposes Senate Bills 271-273 due to the negative impact the legislation would have on the affordability and reliability of electric and gas services to small businesses, and the ability to have a voice in future energy policy decisions.

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