Activist's Critique of Prop 3 Study Completely Incorrect

Jeff Deyette at the pro-Proposal 3 “Union of Concerned Scientists,” makes factually incorrect assertions about the Mackinac Center’s study on Proposal 3’s economic impact.

In fact, not a single one of his criticisms is accurate.

• Deyette states that the Mackinac Center “cherry picks only the negative impacts on the economy,” and does not include the benefits of increased investment. The STAMP model used in our analysis, however, explicitly considers the increased investments this mandate will cause as well as the decreased investment caused by the increase in electrical costs. In fact, our study is the only study on the 25 percent mandate that includes both the costs and the benefits. Ironically, Deyette points to a study that considers only benefits but no costs of the mandate (and even uses the misleading “job-years” as its primary metric).
• Deyette asserts that we do not consider the marginal costs of the 25 percent mandate above the current 10 percent mandate. He forgets Graphic 2, which does so.
• Deyette makes the judgment that the study used “very little state-specific data,” though he does not state whether that makes any assertion in the study inaccurate. Further, the study used state-specific information on electrical prices, usage, projections, mostly available from the U.S. Energy Information Administration.
• Deyette wrongly alleges that the study “ignores” the cost cap included as part of the proposal. The cap is fully addressed in the study and does not have an impact on the economic consequences of the mandate.In short, the study shows that the cost cap only addresses the cost of "compliance" with the mandate. This requires further bureaucratic interpretation to be an effective cap on consumer rates. The calculated cost of compliance can shift the economic costs of mandate into other "recoverable charges" passed along to consumers. In addition, the costs of subsidized power would not be included in the mandate, though this has economic consequences. Finally, utility firms may decide to pay an increase in the cost of the mandate out of their accumulated reserves, which would also have economic impacts. These points are spelled out in the study but ignored by Deyette’s criticism
• He also asserts that the study uses overly conservative estimations for wind energy capacity. But his preferred figure is within the range used in the study.

He offers no other substantive criticism, though he comments about the trend toward lower costs in renewable energy. This tactic indicates the issue: if the electricity sources he prefers become cost-effective, then no mandate is necessary to encourage their use. Mandating the generation of more expensive electricity costs the state economy, period.