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SBAM study projects net job losses if Proposal 3 passes

October 18, 2012

Passage of Proposal 3, the 25 percent renewable energy mandate, will result in 1,600-1,700 fewer jobs in Michigan every year for 30 years, according to an Anderson Economic Group study commissioned by SBAM and announced today in Lansing.

“Anderson’s impartial analysis of the impact and costs of Proposal 3 projects a loss of more than 50,000 Michigan jobs as a result of higher costs,” says Rob Fowler, SBAM president/CEO. “Michigan can’t afford to risk so many jobs.”

The study considered Proposal 3’s effect on jobs in two ways. First, it considered the reduction in the number of jobs in Michigan that would result from the increase in electricity prices ($187 million in additional annual cost or $5.6 billion over 30 years), which would result in a decline in economic activity and employment. Second, although jobs would be lost due to the increased cost of electricity, some jobs would be created by electricity generators (an initial six-year period ) as electricity suppliers increase the proportion of their output that comes from renewable sources. But the net effect would be to create a few jobs and destroy many jobs.

The study also finds fault with the energy restrictions that Proposal 3 would enshrine in the Michigan Constitution. It would define renewable energy sources as being wind, solar, biomass and hydropower only, thus diverting investment away from other renewable energy sources and away from investment in improving efficiency. Proposal 3 also restricts electricity suppliers from buying cheaper renewable sources outside the state.

Finally, the study says it is not at all clear from the ballot wording whether the mandate requires price increases resulting from incremental renewal generation costs to be limited to one percent per year, or that price increases resulting from incremental renewable generation costs may not push price increases above one percent, or that the mandate limits price increases for any reason to one percent per year. If Proposal 3 passes, the uncertainty would be enshrined in the Constitution.

“Michigan currently has a strong law ensuring that a significant portion of our state’s energy portfolio utilizes renewable sources of energy,” says Fowler. “We shouldn’t lock into the Constitution anyone’s preconceived ideas about the proper mix of our energy sources. Given the volatile nature of energy pricing and new technologies for extracting clean-burning energy, Michigan can’t afford to be inflexible about power sources. Approval of Proposal 3 would cement that inflexibility into our Constitution.”

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