In UP, calls to change state energy law

The future of Michigan’s Upper Peninsula is threatened by the state’s energy law, says a state representative from Cedar River. Republican Rep. David Prestin is urging the state Senate to approve two bills that have passed the Michigan House.

Without these bills, which are in a committee in the Senate, soaring electricity prices could prompt major employer Cleveland Cliffs to move its operations out of state, Prestin told Michigan Capitol Confidential. Prestin’s district stretches from Menominee to just outside Sault Ste. Marie.

Cleveland Cliffs operates the open-pit Tilden mine south of Ishpeming, whose products are used to make steel. It purchases electricity from Upper Michigan Energy Resources, a utility that uses reciprocating internal combustion engines, known as RICE generators, which burn natural gas to generate electricity.

Current Michigan law requires utilities to get an increasingly large share of their power from so-called clean energy systems, with a 100% share required by 2040, according to the House Fiscal Agency.

The Michigan Public Service Commission, the House agency said, can let utilities delay complying with the law when it deems compliance “is not feasible.”

Prestin told CapCon he fears that the commission could refuse to grant an extension in the future, forcing Upper Michigan Energy Resources to shut down the generators prematurely. The utility would need to seek electricity elsewhere, he said, and its customers, including Cleveland Cliffs, would be obligated to help with the cost of acquiring the generators – an obligation that runs through 2049, regardless of whether the mine is open.

Shutting down the generators early could imperil the Tilden mine, Patrick Bloom, executive vice president of government relations for Cleveland Cliffs, said at a press conference organized by Upper Peninsula legislators. “That’s not an overstatement. It’s an economic reality,” Bloom told reporters. Lawmakers and a representative of the United Steelworkers also spoke at the event.

If Cleveland Cliffs closes the mine, the effects would be devastating, Prestin told CapCon. The mine employs approximately 900 people and had a total economic impact of $452 million as of December 2017, according to a 2018 Cleveland Cliffs fact sheet.

Michigan lawmakers should protect the mine and its workers, Prestin and other lawmakers said at the press conference, by enacting House Bill 4283, which Prestin introduced, and House Bill 4007, sponsored by Rep. Karl Bohnak, a Republican whose district includes Marquette and Ishpeming. Both bills passed the House in May on a bipartisan basis and now sit in the Senate Committee on Government Operations.

Prestin’s bill would amend state law to say that the generators meet clean-energy standards. Bohnak’s legislation would amend state law to define the generators as “clean energy systems,” per the House Fiscal Agency analysis.

State regulators have “recognized from the beginning the special situation in the Upper Peninsula, and we support legislative efforts to come to a solution that makes the best sense for the UP,” Matt Helms, public information officer at the Michigan Public Service Commission, told CapCon in an email.

Still, Prestin said, legislation is required to protect the generators and the mine from the whims of executive branch officials.

“The economy of the central Upper Peninsula is dependent on our mining jobs,” Michael Grondz, vice president of the United Steelworkers Local 4950, said in an email to CapCon. Grondz also spoke at the Nov. 12 press conference.

Gov. Gretchen Whitmer, who appoints members to the Michigan Public Service Commission, did not respond to an emailed request for comment. Neither did Senate Majority Leader Winnie Brinks, D-Grand Rapids.