Energy policy in Michigan

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Energy policy in Michigan
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Quick Facts
Energy Department Michigan Energy Office
State Population 9.9 million
Per Capita Income $37,497
Energy Consumption
Total Energy Consumption 2,803 trillion BTU[1][2]
Per Capita Energy Consumption 284 million BTU
Energy Spending
Total Energy Spending $39.49 million
Per Capita Energy Spending $3,999
Price of Residential Natural Gas $8.18 per thousand cubic feet
Price of Electricity 14.59 cents per kWh
See also
Energy on the ballot
Statewide fracking on the ballot
Local fracking on the ballot
Policypedia
Policypedia Energy logo.jpg
Energy Policy Project
Energy policy in the United States
Energy use in the United States
Energy terms and definitions
Energy policy in Michigan
Fracking in Michigan

Energy policy in Michigan depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in Michigan, and many other states, focuses on decreasing emissions and dependence on fossil fuels by increasing energy efficiency and the use of renewable energy. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.
See also: Fracking in Michigan

Energy overview

State facts

Below are quick facts about Michigan’s energy climate.

Michigan

  • is a net electricity importer.
  • has fossil fuels in the form natural gas and petroleum.
  • has renewable energy resources in the form of biomass and biofuels, hydropower, wind and solar energy.
  • ranks 12th in the nation for ethanol production.[3]
  • converts cow manure into energy with anaerobic digesters.
  • has three nuclear plants which provide over 30 percent of the state's electricity.
  • mandates that 10 percent of all electricity come from renewable sources by 2015.[4]

In Michigan

  • households consume about 10 percent less energy than the U.S. average, and spend about 10 percent less on energy than the U.S. average.
  • just over half of the electricity consumed comes from coal.
  • natural gas is the main source of energy used in home heating.
  • most of the renewable energy is produced from wood waste.
  • the residential sector consumes the most energy.[4]

Available energy resources

Michigan has traditional energy resources, especially natural gas, and some oil. Michigan has the most underground natural gas storage capacity in the United States. Natural gas reserves are found in the northern part of the state. They also import Liquified Natural Gas from Canada and other parts of the United States. Michigan has limited oil reserves and imports most of its oil from Canada or from the Gulf South. Although Michigan has produced coal in the past, it has no active mines today. Michigan's ports on the Great Lakes handle a third of all coal shipments in the Great Lakes.[4]

Michigan has renewable energy resources that contributed 5.4 percent of the energy used for electricity in 2009 according to the Michigan Public Service Commission. Most of that generation comes from biomass electrical generation from wood waste. There are over 100 hydroelectric power plants in the state, but these contribute little to Michigan's total generation. Wind generation is rapidly growing, but contributes much less than the total capacity that the 20 or so utility scale wind farms could produce. Michigan also has ethanol and biodiesel production, fed by the state's large corn yields. The state also has several facilities that generate electricity from landfill methane and anaerobic digesters.[4][5]

Consumption and prices

Energy consumption in Michigan
MI energy consumption chart.png

Legend[6]
     Transportation       Residential     Industrial       Commercial
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As shown on the pie chart in 2011, about one quarter of Michigan’s energy use went to residential, transportation and industrial sectors. Just over a fifth went to commercial uses. Despite mild winters in the northern part of peninsula, most of Michigan's population lives in the southern end, which has a more severe climate. The cold winters in Michigan's southern half drive the residential demand for home heating. Most of the energy used in the state is in the form of natural gas followed by coal and petroleum.[4][7] Gasoline, used in transportation, accounts for most of the petroleum consumed in the state. Generally, gasoline prices have tended to follow the national average, but with more fluctuations and still a few cents higher than the average.[8][9] According to the EIA's February 2014 report, the federal excise tax is 18.40 cents/gallon of gasoline and 24.40 cents/gallon of diesel fuel. In addition to that, Michigan collects a total tax of 38.7 cents on every gallon of gasoline and gasohol diesel fuel, which ranks it at the sixth highest in the United States.[10][11] Reformulated gasoline is required by the state in order to limit ozone formation.[4]


Comparisons tables

The table below compares Michigan’s consumption and spending for energy, as well as prices for gas and electricity, and carbon emissions to those of Colorado, which has similar needs because of climate and geography. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Michigan and Colorado are significantly different on population, overall consumption and overall spending, however, per capita energy consumption in Michigan (at 35th) is just lower than in Colorado (at 34th).
  • Michigan’s rank of 11th in carbon emissions means that carbon emissions are higher in Michigan than in Colorado, which has a ranking of 22nd.
  • Per capita income in Michigan is higher than the national average, at 16th, and 22 places above Colorado, which ranks at 35th in per capita income.
  • Per capita spending in Michigan is similar, though lower, because it ranks 43rd to Colorado’s ranking of 37th.


Consumption and Expenditures Comparisons Summary
Type MichiganColoradoU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population9.9 million9522313.9 million
Per Capita Income Average$37,49735$45,13514$42,693
Total Consumption2803 trillion BTU111,481 trillion BTU2597,301 quadrillion BTU
Per Capita Energy Consumption284 million BTU35289 million BTU34312 million BTU
Total Spending on Energy$39,499 million1119.333 million27$1,394,088 million
Per Capita Spending on Energy$3,99937$3,77943$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet8.18427.7745$12.48
Price of Electricity, cents per kWh14.591111.652212.31
Total Carbon Dioxide Emissions, million metric tons (2010)165.91196.5225,631
*Rank is from highest to lowest.

In Michigan homes are primarily heated by natural gas. Electricity is the next most common home heating source, at 7.9 percent. Following that homes are heated by LPG, other sources such as wood and fuel oil.

See also: State Energy Rankings to compare all 50 states
Consumption of energy for heating homes in Michigan
Source Michigan 2011 U.S. average 2011
Natural gas 77.4% 49.5%
Fuel oil 1.5% 6.5%
Electricity 7.9% 35.4%
Liquid Petroleum Gases (LPG) 8.8% 5%
Other/none 4.4% 3.6%

Production and transmission

Michigan produced 672.9 BTU of energy in 2011. Of that 51 percent came from nuclear and just over 21 percent came from natural gas. The remaining 38 percent came from coal, biofuels and from what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels." [12]

Energy production by type in Michigan, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Crude oil 40.5 6.02% 0.34%
Natural gas 143.8 21.37% 0.54%
Coal 0 0% 0%
Nuclear 344.2 51.15% 4.16%
Biofuels 37.9 5.63% 1.97%
Other 106.6 15.84% 1.5%

Over half of the energy produced in Michigan comes from nuclear generation. The state has a total of three plants: the Cook, Fermi and Palisades plants, all of which are located in the southern end of the state. The largest of these is the Donald C. Cook plant, which has a net capacity of 1,048 megawatts between the two reactors. The construction grant for the Cook plant was given in 1968 by the Atomic Energy Commission.[13]

The Anterim Field in northern Michigan is one of the top hundred natural gas fields in the United States. Despite having the most natural gas storage capacity in the nation, production is declining. The natural gas produced in Michigan meets less than 20 percent of the state's demand. Michigan imports natural gas from Indiana, Ohio, Wisconsin and Canada. Exploration of the Collingwood Shale, which lies under the Utica Shale of Northern Michigan, may yield more natural gas in the future. The major pipelines in Michigan are the Vector and Great Lakes Gas lines.[4][14]

Where electricity comes from in Michigan[15]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 9,000 0.11% 0.03%
Natural gas-fired 1,001,000 12.08% 0.1%
Coal-fired 4,570,000 55.14% 0.26%
Nuclear 2,178,000 26.28% 0.28%
Hydroelectric 70,000 0.84% 0.02%
Other renewables 417,000 5.03% 0.21%
Total net electricity generation 8,288,000 100% 0.2%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In Michigan there are currently 11 cooperative electric utilities, 9 investor-owned electric utilities and 11 private natural gas utilities.[16][17]

The majority of coal shipped into Michigan for electricity generation is shipped by rail from Wyoming and Montana. There are nine companies and organizations that own and operate electric transmission in Michigan, including: The American Electric Power Company, and The American Transmission Company, which is owned by the Midwest Independent System Operator.[18][19]

Energy policy

Policy Issues

The higher price of electricity in Michigan may be the result of its reliance on coal, which is becoming more expensive because it is being so heavily regulated, due to its carbon emissions. Another reason may be because Michigan created a Renewable Standard Portfolio in 2008. Some studies claim that higher electricity prices are in part the result of renewable portfolio standards (RPS) that mandate a minimum amount of renewable energy (which is more expensive than coal or natural gas) be used for generating electricity.[20][21]

See also: Fracking in Michigan

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves tradeoffs in which energy production and prices are weighed against environmental concerns and efficiency. Michigan enacted a Renewable Portfolio Standard in 2008, which sets an objective for utilities in the state to generate 10 percent of their energy from renewable sources by 2015. Renewable technologies under the bill include: biomass, solar and solar thermal, wind, geothermal, municipal solid waste, landfill gas and various hydroelectric resources. Utilities can comply using a portfolio of methods from energy efficiency programs to renewable certificate training. For utilities serving less than one million customers, the act sets no megawatt capacity requirement. Utilities are required to make up 20 percent of the gap between current renewable production and the 10 percent goal by 2012, 33 percent by 2013, 50 percent by 2014 and to meet the goal in 2015.[22] The American Council for an Energy Efficient Economy (ACEEE) is a non-profit organization dedicated to improving energy efficiency policy in the United States. Each year, they rank each state by their energy efficiency policies. In 2013, Michigan ranked 12th.[23]

Major legislation

  • PA 295, "The Clean, Renewable, and Efficient Energy Act" (2008) requires electric utilities to generate 10 percent of their energy portfolio through the use of renewable energy sources by the year 2015. Some of that standard may be met through energy efficiency projects. The bill identifies eligible renewables including: biomass, solar and solar thermal, wind, geothermal, municipal solid waste, landfill gas and various hydroelectric resources. Extra requirements for large utilities serving over one million and over two million customers include standards for minimum megawatt generation from renewable energy for the years 2013 and then 2015. Utilities can also purchase and trade renewable energy credits to meet the standard. PA 295 also contains an Energy Efficiency Standard that mandates utilities to provide customers with energy efficiency programs and requires incremental savings from electric and natural gas utilities. A utility's energy efficiency programs must: be tailored to provide for varying income levels, specify funding levels, show how costs will be recovered, ensure that different program costs will only affect the income level which that program is meant to help, demonstrate cost effectiveness, have administration and include an independent evaluation. In 2008 and 2009, an electric utility needs to save about one-third of one percent of 2007 retail sales. The amount of incremental savings is required to reach a level of one percent of retail sales by 2012. Natural gas utilities have a goal of 0.75 percent annual reduction of previous year's natural gas retail sales by 2012.[24]
  • The Clean, Renewable, Efficiency Act also created new energy standards for state buildings. The act sets a goal for a 25 percent reduction in grid-based energy purchases by 2015. The Michigan Department of Management and Budget oversees the process of obtaining the goal. Under the new standards, every building in government use must be evaluated every five years for new ways to reduce energy usage. The state must examine the cost of using Leadership in Energy and Environmental Design's (LEED) green building standards when constructing, leasing and remodeling buildings. Energy efficient technology should be used whenever possible. Along with these major changes, the act requires a number of smaller changes including the creation of a web-based energy usage tracking system.[25]
  • PA 286 (2008) created added requirements for utilities that want to expand their capacity. Whether that utility wants to expand by construction of a new plant, plant renovation or through long-term power purchase, it must obtain a Certificate of Necessity (CON) from the Michigan Public Service Commission (MPSC). When filing for a CON, utilities must include an Integrated Resource Plan (IRP). An IRP contains a long term forecast of the utility's growth, types of generation technology, capacity purchased or produced from renewable sources, energy efficiency program savings and more. The act also requires utilities filing for a CON to provide an Electric Generation Alternative Analysis.[26][27]
  • The Michigan Next Energy Authority Act (2002) created a property tax exemption up to 100 percent, which was designed to promote alternative energy technologies. Property qualifies for the exemption if the taxpayer does the following: uses alternative energy systems with certain megawatt limits (except for wind, photovoltaics and fuel cells, which have no limit), uses alternative energy vehicles, is an alternative technology business, or is involved in researching, developing or manufacturing alternative energy technology. The exemption is given by certificate through the Michigan State Tax Commission.[28]
Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.


See also
Local fracking on the ballot

Statewide fracking on the ballot

Ballot measures

Below is a list of energy related ballot measures across Michigan. These ballot measures cover issues from fracking bans, to utilities and related tax questions.

Government agencies and committees

  • The Michigan Public Service Commission (MPSC) is the regulatory agency over all utilities in Michigan. The MPSC has eight divisions, including the Regulatory Affairs, Electric Reliability and Regulated Energy divisions, that deal with energy regulation directly. The MPSC works directly underneath the Michigan Department of Licensing and Regulatory Affairs (LARA). The commissioners are appointed by the Governor, with consent of the Senate, to staggered six year terms.[29][30]
  • The Michigan Energy Office (MEO) is part of the Michigan Economic Development Corporation (MEDC), the state's marketing arm. The purpose of the MEO is to promote energy efficiency and renewable energy development for Michigan's residents, businesses and public institutions. MEO projects are funded through the U.S. Department of Energy and the Michigan Strategic Fund. Programs funded through the MEO include the Green Communities Challenge Program, the Save Energy Now Program, the Energy Efficiency and Renewable Energy Revolving Loan Program and other renewable and efficient energy projects.[31][32]
  • The Department of Natural Resources is responsible for promoting outdoor recreational opportunities, wildlife and fisheries management, forest management, state land and minerals, state parks and recreation areas, and conservation and law enforcement. The Director of Natural Resources manages the department and serves on the Natural Resources Commission.[33]

Major organizations

  • Environment Michigan is a statewide, citizen-based environmental advocacy organization. It acts as a research and advocacy group that tries to raise awareness of environmental issues and promote better solutions. Most of its work happens through journalism channels.[34]
  • The Michigan Environmental Council (MEC) is a non-profit organization of more than 70 organizations, both local and national. It was created in 1980 to advocate for better environmental policy. The MEC works in the political process, influencing individual legislators and rallying alliances in support of reforms.[35]
  • The Midwest Energy Efficiency Alliance (MEEA) is a non-profit organization founded in 2000 to promote energy efficiency in the 13 midwestern states. Members of the MEEA include governments, utilities, research institutes, manufacturers, energy service providers and advocacy organizations. They support policy, initiatives, education and energy efficiency projects throughout the midwest.[36]
  • The University of Michigan Energy Institute was founded in 2006 to build off the legacy of the Michigan Memorial Phoenix Project, which advanced peaceful uses of atomic energy. The institute pushes for new energy discoveries and better policy development. They work with industry and government in collaborative research projects and are participants in the academic discussion on energy.[37]

In the news

This section displays the most recent stories in a Google news search for the term "Michigan+Energy+Policy"

All stories may not be relevant to this page due to the nature of the search engine.

Michigan Energy News Feed

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See also

External links

References

  1. These figures come from the U.S. Energy Information Administration State Profiles and Energy Estimates, Michigan Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  2. U.S. Energy Information Administration, Michigan Overview, accessed February 14, 2014
  3. Energy Information Administration, "Energy Production Estimates in Physical Units, Ranked by State, 2011," accessed March 14, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 U.S. Energy Information Administration, "Michigan Profile Analysis," December 18, 2013
  5. Michigan Public Service Commission, "MPSC Issues Annual Report on Renewable Energy," accessed March 14, 2014
  6. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  7. Michigan PSC, "Michigan Energy Overview, 2011," accessed March 4, 2014
  8. Gas Buddy, “Historical Gas Charts,” accessed March 4, 2014
  9. To compare current gasoline prices in Michigan to the U.S averages, go to GasBuddy.com
  10. U.S. Energy Information Administration, "Petroleum Marketing Monthly," February 2014, accessed February 14, 2014
  11. The Tax Foundation, "State Gasoline Tax Rates, 2009-2013," March 21, 2013
  12. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
  13. American Electric Power, "The Cook Nuclear Plant", accessed March 5, 2014
  14. Michigan PSC, "Michigan Energy Profile," accessed March 5, 2014
  15. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, "Michigan Overview," accessed February 5, 2014
  16. Michigan PSC, "Gas Utilities in Michigan," accessed March 5, 2014
  17. Michigan PSC, "Electric Utilities in Michigan," accessed March 5, 2014
  18. Michigan PSC, "Michigan Energy Profile," accessed March 5, 2014
  19. Michigan PSC, "Electric Transmission Companies," accessed March 5, 2014
  20. According to a report called "The Status of Renewable Electricity Mandates in the States," by the free-market Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states without RPS. The report is available here: [1]
  21. The Economic Impact of Michigan's Renewable Portfolio Standard, "WPRI Reports," March 2013, accessed February 12, 2013
  22. U.S. Department of Energy, "Michigan Renewable Energy Standard," accessed March 5, 2014
  23. American Council for an Energy Efficient Economy, "Michigan Utility Policies," accessed March 6, 2014
  24. U.S Department of Energy, "Michigan Renewable Energy Standard," accessed March 5, 2014
  25. U.S. Department of Energy, "Energy Efficiency in State Buildings," accessed March 5, 2014
  26. Michigan Public Service Commission, "Adding Electric Supply/IRP," accessed March 6, 2014
  27. Michigan State Legislature, "Michigan Public Service Commission Act 3 of 1939," accessed March 6, 2014
  28. U.S. Department of Energy, "Michigan Alternative Energy Property Tax Exemption," accessed March 6, 2014
  29. Michigan Public Service Commission, "About the MPSC," accessed March 5, 2014
  30. Michigan Public Service Commission, "MPSC Divisions," accessed March 5, 2014
  31. Michigan Economic Development Commission, "Michigan Energy Office", accessed March 5, 2014
  32. Michigan.Gov, "Welcome to the Michigan Energy Office," accessed March 5, 2014
  33. Michigan Department of Natural Resources, "The Department of Natural Resources," accessed November 5, 2011
  34. Environment Michigan, "About Environment Michigan," accessed March 5, 2014
  35. Michigan Environmental Council, "About MEC," accessed March 5, 2014
  36. Midwest Energy Efficiency Alliance, "Empowered to Be the Source on Energy Efficiency," accessed March 5, 2014
  37. University of Michigan, "About the University of Michigan Energy Institute," accessed March 4, 2014