Michigan lawmakers propose $ 250 million natural gas fund
The Michigan legislature plans to allocate $ 250 million to help utilities build natural gas infrastructure, while a separate proposal would force the state to study the use of biogas, which utilities have called “Renewable natural gas”.
The grant, which was approved by the House appropriations committee on Thursday and will likely be voted on Tuesday, is strongly opposed by environmental groups and some Democrats.
“This is crony capitalism at its worst and that’s not what the government should do with these dollars,” said Democratic Minority House Leader Yousef Rabhi. “Utilities reaped $ 2 billion in profits during the pandemic, and they should spend that money to make sure more people have access to gas. It should not be up to the taxpayers. “
Much of the bill is designed to expand natural gas infrastructure to areas of the state’s upper peninsula with homes that are now primarily heated by propane. With the impending shutdown of the Line 5 pipeline, which supplies propane to about 15% of homes in the region, propane suppliers will soon be forced to haul propane by truck, which could increase costs slightly.
The shutdown order sparked a conversation about delivering energy to the Upper Peninsula. Governor Gretchen Whitmer’s Upper Peninsula Energy Task Force March 31 delivered ideas on how to improve the supply and reliability of energy in the region. Among his suggestions are electrification, increased coordination between utilities and investments in energy efficiency projects. The task force did not call for expanding infrastructure for natural gas, which heats about 57% of buildings and homes on the peninsula.
The legislation would create a “natural gas expansion fund”. The state’s private utilities could pull out of the $ 250 million pot for projects that extend service to currently “underserved or unserved” areas. The bill claims the program would help improve “the reliability and stability of energy supply” to these parts of the state while lowering energy costs for customers.
The fund would be managed by the Michigan Public Services Commission, which would review utility money requests. The funding could also be used by utilities to pay for customer assistance programs, although this is not a requirement.
The program will be funded from the general state fund, which is supplemented this year by $ 2.5 billion in federal COVID-19 relief. The state’s contribution to the general fund this year is less than $ 1 billion, so the proposal is seen by opponents as a giveaway of pandemic relief funds.
It drew fierce opposition from environmental circles.
“We don’t think this is a good use of taxpayer dollars from an affordability standpoint, from an air quality standpoint or from a climate standpoint – we don’t want to invest any money. new dollars in gas infrastructure, ”said Charlotte Jameson, program director for legislative affairs, energy and drinking water policy at the Michigan Environmental Council.
The propane industry will likely oppose it, the bill could gain support from the Michigan State Utility Workers Council union and private utilities. It was introduced by Credit Committee Chairman Thomas Albert and backed by the House Republican leadership, and may have sufficient bipartisan support to pass both houses. If he lands on the governor’s desk, Whitmer could use a veto on an item because it’s part of the bigger budget, but she would also face pressure from labor groups.
However, the bill is relatively new and it is difficult to determine whether it has sufficient support to pass the Senate, Rabhi said.
“It’s a lot of money for a new program and there might be more opposition once the light comes on again, so it might end up being a bit more difficult than lawmakers and utilities.” think, ”added Jameson.
The grant comes as environmental groups push the state to invest more in renewables and move away from natural gas, which the utility sector calls a “bridge” to renewables. DTE Energy, the state’s largest private utility, is building a new natural gas plant in St. Clair County, and has spent billion on the acquisition of gas pipelines in Pennsylvania and Louisiana over the past five years.
The bill claims the expansion of natural gas service “supports the state’s carbon reduction targets,” but environmental groups say that is clearly false.
“Giving Michigan utilities $ 250 million to expand their fossil fuel infrastructure will be a climate disaster and immediately increase pollutants that disproportionately affect communities of color that have also suffered the most from the pandemic,” said Matt Kasper, Director of Research at Energy and Policy. Institute, a watchdog for the utility industry. “Instead, our government and utilities need to work quickly to reduce emissions, allocate resources to renewable energy, and boost aging programs.”
The money could also finance the construction of biogas infrastructure. Utilities refer to gas captured during the combustion of organic materials or gas from landfills or other sources as “renewable natural gas” and refer to it as a form of clean energy. A separate position would require the Michigan Utilities Commission to study the feasibility of expanding the biogas infrastructure.
Jameson said the Michigan Environmental Council also opposes it. While there are some beneficial uses such as capturing gas from landfills, the process is generally too expensive and there are cheaper and better alternatives, such as electrification, she said.
“It’s a little ‘pie in the sky’,” added Jameson.