Experts: Michigan Senate's Utility Bill Shackles State To Obama EPA Overreach

Two days after the Nov. 8 election, the Michigan Senate passed a rewrite of the state’s electric utility law that some experts say would lock this state into a regulatory scheme that President-elect Donald Trump has promised to repeal. Supporters argue that without the bill, the state could face electricity shortfalls.

It is not yet known if the state House has the votes to pass the bill in the lame-duck legislative session that begins Nov. 29.

The bill’s proposed regulatory arrangements are part of this state’s response to the Environmental Protection Agency’s “Clean Power Rule.” The rule would force states to reorganize their electrical grids according to federal regulations and is one reason for recent and upcoming closures of coal-fueled electric plants.

During the campaign, candidate Donald Trump said he would rescind the Clean Power Rule of the Barack Obama administration, which opponents say far exceeds the EPA’s legal authority. President-elect Trump has repeated the promise again since his Nov. 8 victory.

Rep. Tim Kelly, R-Saginaw Township, opposes the Senate bill and said Trump’s victory changes everything.

“In light of the election, given the fact that a President Trump would likely reverse many of Obama's clean power regulations, I think it would be foolhardy for the House to act on the what was passed out of the Senate,” Kelly said in an email. “Let's not base Michigan energy policy on yesterday's news.”

Under current Michigan law, decisions over whether a new power plant is needed, what kind of plant it should be and where it should be located are largely made by regional utilities, although the state is heavily involved. Under the bill, these decisions would be made instead in a centralized government planning process by political appointees on the state Public Service Commission. Utilities, along with other interests and agencies, would have some input.

Jason Hayes, director of environmental policy at the Mackinac Center for Public Policy, said the situation has changed since the Senate bill was crafted. “The presidential election effectively shifted the ground under the feet of energy and environmental policy in Michigan. A far more reasonable strategy would be to pause, take a breath, and see how rapidly changing federal regulations settle out,” Hayes said.

Critics also say the Senate-passed bill will reduce the opportunity for a free market to develop in electricity, without which electricity costs will rise.

Michael Giberson, a member of the Center for Energy Commerce at Texas Tech University, said in an email, “We advocate customer choice in electric power as a way to get a more dynamic, innovative and customer-centered electric industry.” Giberson, who is also on the faculty of the business college at the university, said that regulated monopolies — such as Michigan's two large electric companies — are constrained. “Traditional regulated monopolies have trouble being innovative, or truly customer-centered, because they operate in an environment in which every big development or significant risk requires permission from regulators.”

Some people have questioned whether Trump would have the authority to rescind the rules. But recent articles by legal scholars in The Wall Street Journal and elsewhere indicate that even if the rescission is challenged in court, the process would render the rule without legal force.