Back to the Drawing Board on Energy Policy

The election could mean a different future for electricity

While most of the world was following election results, another key issue that will heavily affect Michiganders was moving in the state Legislature. Regulations covering energy and electricity choice have been ramping up there, but national events should put a halt to Michigan Republicans fast-tracking this issue.

The election of Donald Trump as the next president of the United States and the GOP maintaining control of the U.S. House and Senate means the key reason for pushing forward with Senate Bill 437, a bill that will revise utility regulations in Michigan, has effectively gone away.

One primary reason supporters of SB 437 give for it is “system reliability.” They explain that the need to address alleged shortfalls in Michigan’s electricity supply effectively forces their hands. However, that argument is based largely on the existence of federal regulations, such as the Clean Power Plan and the Mercury and Air Toxics Standard, which have mandated an artificial timeline for closing existing coal plants.

With the presidential election now decided, the regulatory mandates to close those plants will likely die, or at the very least significantly change. Given these changes, we should recognize there is now no pressing need to impose bills like SB 437 onto the population of Michigan.

Simply put, it’s time for people who are pushing for their passage to stop.

President-elect Trump spoke on these federal regulations at the Economic Club of New York in September:

One of the keys to unlocking growth is scaling back years of disastrous regulations, unilaterally imposed by out-of-control bureaucrats. Regulations have grown into a massive job-killing industry. And the regulation industry is one business that I will absolutely put to an end, day one. … I propose a moratorium on new federal regulations that are not compelled by Congress or public safety, and I will eliminate all needless and job-killing regulations now on the books — and there are plenty of them. This includes eliminating some of our most intrusive regulations, like the Waters of the U.S. rule. It also means scrapping the EPA’s so-called Clean Power Plan, which the government itself estimates will cost $7.2 billion a year. This Obama-Clinton directive will shut down most, if not all, coal-powered electricity plants — all over the country, they’re shutting down.

Most of the country had been operating on the notion that, if she were elected, Hillary Clinton would continue, or even ramp up, the actions of President Barack Obama in the realm of environmental regulation. A Clinton administration was expected to encourage the EPA to double down on the Clean Power Plan.

A Clinton administration was also expected to nominate — at a minimum — one Supreme Court justice. That nomination would have fundamentally shifted the balance of the court, with significant policy implications. For example, in February, the high court instituted a stay on the Clean Power Plan on a 5-4 vote and then sent the case back to the U.S. Court of Appeals for the D.C. Circuit for reconsideration.

It was expected, then, that when the Supreme Court took up the Clean Power Plan again, the regulation would find a far more friendly reception than it had before. This provided a boost to the legislative changes being considered in Michigan. But the election of Donald Trump changes the expectations for the makeup of the Supreme Court, and with it, the court’s expected response to the Clean Power Plan.

In Michigan, there are eight coal-fueled power plants, representing approximately 2.2 gigawatts of installed capacity, that have been targeted for closure by 2025. Energy industry experts, operating under pre-2016 election assumptions, had predicted that parts of the state would experience an electricity shortage in the coming years.

But, in a post-2016 election world, those eight plants could be maintained and upgraded to meet that need, while giving us much needed time to add new capacity for generating electricity.

Supporters of the Senate-passed bill as it has evolved have argued that doing nothing is not an option. There has also been a great deal of work done and a great deal of money spent on this legislation. But the voters of Michigan and the country made a clear statement on Nov. 8, and new policies will govern the development and use of energy.

Things are very different in this post-election world. It’s time to go back to the drawing board with a new plan that uses Michigan’s variety of energy sources to the benefit of citizens.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.