With Michigan’s unemployment rate tops in the nation and the state hemorrhaging population, Democratic governor Jennifer Granholm prescribed raising personal-income taxes, declaring them a “pro-growth” initiative because they were an “investment” in state programs. Now she has hit upon another “job engine” – government-mandated Renewable Portfolio Standards (a preview, no doubt, of our next Democratic president’s stimulus plan).
Returning from a national governor’s meeting Tuesday, Granholm declared her state a renewable energy “backwater,” arguing that her proposed RPS would be “the fastest way we can create jobs.”
In fact, an RPS would have just the opposite effect: By mandating costlier renewables, a Michigan RPS would drive business away to Midwest neighbors (or abroad) by increasing electricity rates in a state that already has the highest industrial power rates in the region (though relatively cheap nationally, more on which below).
Granholm points to 28 other states that already have RPS standards (her plan would require utilities to produce 10 percent of their power from renewables by 2015 and 25 percent by 2025), but that is hardly a compelling sell. As a 2007 study by Myron Ebell and William Yeatman of the Competitive Enterprise Institute concluded, electricity costs in RPS states are 30 percent above those in non-RPS states. RPS mandates are largely fulfilled by wind which is considerably more expensive than traditional energy sources even with a federal subsidy of 1.9 cents per kilowatt hour.
What Granholm also doesn’t mention is that Michigan has shied from wind precisely because it’s not a good wind-producing state. Next to the Southwest, in fact, the Midwest has the least wind potential in the country. Yet, the region has low electricity rates because of its access to cheap coal.
In effect, then, Granholm’s RPS would actually negate one of the industrial Midwest’s few remaining assets — cheap energy!
Of course, the local media disclosed none of this essential information to its readers. Instead, taxpayers are left to consult the CEI study which ominously concludes: “RPS would require states with low electricity prices and proportionately lower renewable energy potential — such as is found in our industrial heartland — to raise electricity prices to a level that would force their industries to migrate overseas to countries with cheaper energy rates and no renewable portfolio standards.”
Governor Granholm might better call her RPS bill the “Send Our Jobs to Mexico Act.”