Shock waves

With this paper having just done a cover story on the efforts under way to promote energy efficiency and bring more renewable resources such as wind and solar power to Michigan ("Power play," MT, March 21), News Hits was especially interested in a proposal recently floated by state House Speaker Andy Dillon (D-Redford Township), who wants to solve the state's budget crisis by taxing electric utility companies.

What, we wondered, would be the effect of the proposed tax on the attempted greening of our utilities?

Granted, News Hits is still trying to figure out what was so funny about the Laffer curve, and we're pretty sure we're never going to get the Nobel Prize in economics (although we haven't yet given up hope on snagging that peace medal one day). Still, we thought Gov. Jennifer Granholm's idea of creating a 2 percent tax on services seemed like a good one. So that plumbing bill would be $102 instead of $100. We could live with that. And since the well-off use more services than the struggling classes — no frequent visits to the dry cleaners for us — it's fairly progressive.

But no, the GOP — and a fair number of Granholm's fellow Democrats — couldn't abide by that. So the 2 percent solution appears dead. Which brings us to Dillon's plan, which, at this stage, is still in skeletal form.

When the state's utilities were deregulated under the Engler administration, many thought it was a bad idea. They doubted that increasing competition would really lead to lower rates for homeowners and small businesses. Time has proved those predictions correct, says Martin Kushler, a Michigan-based utility expert who works for the nonprofit American Council for an Energy Efficient Economy. Before taking that job, Kushler worked for the Michigan Public Service Commission, where he monitored electric restructuring efforts nationwide.

With the push to deregulate having largely "fizzled out" across the country, says Kushler, the idea of returning monopoly power to Michigan's two major utilities — DTE and Consumers Energy — in return for them accepting a new tax that would bail the state out of its financial mess holds some real promise.

Other environmental and consumer advocates News Hits talked with echoed that view. The key would be structuring a deal that includes a guaranteed commitment to energy efficiency programs and clean, renewable resources. The danger is a plan that would simply open the door to a surge in new coal and (possibly) nuclear-powered plants.

However, if it's done right, especially in terms of energy efficiency programs, customers could come out ahead, cutting back on electricity usage to the point where they'd be saving money in the long run, even with the new tax added in, says Kushler.

"I can see a way a package could be put together that consumer advocates and environmental groups would get behind," says Kushler. "You could help ratepayers and the state's economy."

News Hits is edited by Curt Guyette. Contact him at 313-202-8004 or [email protected]
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