Elaborate Propane Commission Scheme May Be About Pipeline Shutdown

Editor's note: An earlier version of this story quoted Nick Assendelft as saying the Gov. Gretchen Whitmer administration supported the legislation reported on in this story. Assendelft, a spokesman for the state of Michigan's Department of Environment, Great Lakes and Energy (EGLE) said after the story was published that was not accurate. "I can’t speak for the Governor’s office as I am the spokesperson for EGLE, so I would not have said specifically whether the Whitmer administration supports specific legislation. I have no knowledge of their support or opposition to specific legislation. I know we talked about the aims of the U.P. Energy Task Force and the recommendations in its propane report, but I didn’t speak nor can’t speak for the Governor’s office on specific legislation," Assendelft said.

Michigan’s elected leaders are on track to authorize a special assessment on the sale of propane, in the state, creating a fund to provide incentives for propane users to purchase high-efficiency appliances and equipment.

The legislation is roughly modeled on the state’s existing commodity marketing programs, such as those that impose a levy on tart cherries or sugar beets in the name of promoting consumer purchases. But it appears to have the paradoxical aim of reducing the propane consumption.

A final version of the bill, sponsored by Sen. Ed McBroom, R-Vulcan, was approved in the state House Wednesday evening on a 81-24 vote.

The Senate unanimously approved an earlier version, so it could concur with the House version and send it to Gov. Gretchen Whitmer.

Jason Hayes, director of environmental policy at the Mackinac Center for Public Policy, said the bill reflects a muddled state approach to energy, which tries to suppress the use of fossil fuels but then also subsidizes purchases of them.

“They force people into energy poverty by making energy too expensive and unreliable and then they subsidize people’s use of expensive and unreliable energy,” Hayes said.

The levy called for by the bill would be at least 1/10 of 1 cent for each gallon of propane sold in the state, to be collected from retailers by distributors. The assessment could be later increased fivefold, to 1/2 of 1 cent per gallon.

Nick Assendelft, a spokesman for the state Department of Environment, Great Lakes and Energy, said the legislation would be “replacing appliances will ultimately reduce propane use and save users money on their utility bills,” and would be part of a “transition to renewable energy ... (and putting) Michigan on a path toward carbon neutrality by 2050.”

The legislation, Senate Bill 1133, authorizes the state to create a propane commission, made up of those in the industry, and to impose a levy on propane sales

An earlier version of the bill called for the commission to “foster, develop, and promote the sale and use of propane,” as well as “promot(ing) propane vehicles ... (and) propane as a clean energy source.”

That language was removed at the behest of the Whitmer administration, however. The bill now calls on the commission to educate the public on the safe use of propane and promote high-efficiency appliances.

The McBroom legislation was supported by the Michigan Propane Gas Association and, in committee, opposed by the administration.

Jason Wadaga, government relations director for the Michigan Propane Gas Association, said the industry would have preferred the measure include provisions for expanded marketing of propane, such as for use in fleet vehicles. But opposition from the administration prevented it, he said. Nevertheless, the program should result in a heightened appreciation of propane as a safe and reliable fuel, Wadaga said.

“Overall, we see it as being beneficial,” he said.

Hayes said the bill’s advocates may view the commission as a way to push back on the governor’s decision to force the closure of Enbridge Line 5. The Enbridge pipeline is a primary source of heating fuel to the Upper Peninsula.

Both the propane association and UP lawmakers have been harshly critical of that decision, which Enbridge is challenging in court.

Hayes said that the advocate’s hope for the commission is probably misplaced. As Assendelft’s comments indicate, he said, the administration remains committed to an unrealistic carbon-neutral future. In the short term, that commitment will push rural propane users to convert to prohibitively expensive electricity for heating and cooking, he said.

According to the report of the UP Energy Task Force, commissioned by Whitmer in 2019, there are 323,130 households in the state that use propane, or 8.3% of the population. In the Upper Peninsula, 18.6% of households rely on it.