Explainer: How Michigan’s new energy laws will help lower energy costs and create jobs in low-income communities
According to federal data, Michiganders pay the highest electricity costs in the Midwest and experience some of the worst reliability in the country. For low-income households and communities, these high energy burdens have real impacts, forcing many to make the tough choice between buying groceries for the week and paying their energy bills. To make matters worse, some of the same households and communities bear the brunt of air pollution from fossil fuel plants. We can — and must — do better.
Michigan LCV’s Wesley Watson speaking at a press conference focused on clean energy bills last summer.
Fortunately, the governor signed the Clean Energy and Jobs Act into law late last year. This historic package of bills will move Michigan to 100% clean energy, creating high-paying union jobs, drawing down federal dollars, and providing more tools for the Michigan Public Service Commission to focus on solving inequities in health impacts through the energy supply planning process.
Below is a breakdown of what the Clean Energy and Jobs Act will do to make Michigan’s energy system more equitable:
Giving state regulators more tools to regulate utility companies
Michigan’s two largest utility companies – DTE and Consumers Energy – provide power for the vast majority of Michigan residents and they operate as regulated monopolies. That means whenever they want to build new power plants or raise rates, they must file a case with the state of Michigan, which then evaluates the utilities’ plans and decides how they move forward, and at what cost, similar to a court case. The regulators that make these decisions sit on a body called the Michigan Public Service Commission. When utility companies submit their plans, the Commission has the authority to reject them, make changes, or approve them based on a set of criteria laid out in the law.
So why does this matter?
A protest against Michigan Public Service Commission (MPSC) hearing in Detroit.
The Michigan Public Service Commission makes major decisions regarding if and what power generation gets built in Michigan, which has long-lasting impacts on our energy system.
Under the Clean Energy and Jobs Act, the Michigan Public Service Commission is now required to include health, pollution, and affordability when evaluating utility companies’ long-term energy plans.
Moreover, utility companies are now required to submit a review of anticipated environmental justice impacts for all of their long-term energy plans moving forward, including the construction of natural gas plants. To ensure accountability, the Michigan Public Service Commission will be required to study the impacts utility power generation is having on environmental justice communities every four years.
Dedicated energy efficiency upgrades for low-income communities
One of the highlights of this legislation is the requirement for corporate energy utility companies like DTE and Consumers Energy to allocate a significant portion of their weatherization and energy efficiency programs to low-income households and communities. The bills mandate a minimum of 25% for electric and 35% for gas programs within these communities with a focus on health and safety improvements.
Giving us a seat at the table
The average Michigander probably doesn’t know what the Michigan Public Service Commission is or that it even exists. But we should. We as ratepayers have a say in the decisions the Commission makes, and we can have a positive influence.
The Clean Energy and Jobs Act will require the Commission to expand its outreach and engagement with communities impacted most by climate and energy policy. The Commission will be required to hold additional public hearings to ensure voices from disproportionately impacted communities – communities like Detroit, Highland Park, Flint, Grand Rapids, and Benton Harbor – are heard and considered in the decision-making process.
Michigan LCV’s Amani Johnson holding a microphone while an upset DTE customer speaks about their experience after widespread power outages last year.
In tandem with expanding engagement across the state, the laws also guarantee increased funding for the Utility Consumer Participation Board (UCPB). This will reduce barriers and increase access for public interest advocates to more effectively participate in cases considered by the MPSC, including rate cases and Integrated Resource Plans from utility companies.
The UCPB’s granting authority will also see expansions to encompass affordability, climate, environmental justice, public health, and equitable access to clean and efficient energy, a change that will encourage grants to flow to nonprofits representing and advocating for environmental justice and low-income communities.
Creating jobs with a focus on equity
With the increase in investments in energy efficiency, there will be an increase in demand for jobs retrofitting buildings, installing insulation and energy efficiency upgrades, weatherization, and more. The Clean Energy and Jobs Act was drafted intentionally to prioritize the hiring of a diverse workforce for these good-paying jobs. The new law requires utility companies to recruit, hire, and train individuals from low-income communities, creating new employment opportunities and a career ladder for residents. Utility companies will have to report to the state annually on their workforce programs, including specifically on diversity in hiring and training, to ensure accountability for their commitments.
Lt. Governor Garlin Gilchrist, Michigan LCV Board President George Davis, Michigan LCV Executive Director Lisa Wozniak, and Governor Gretchen Whitmer posing together with the signed Clean Energy and Jobs Act
Additionally, the legislation will establish a first-ever Office of Energy & Worker Transition to support both workers and communities in transitioning from coal and gas operations to new industries requiring comparable skills. Moreover, the legislation guarantees that workers hired for utility clean energy projects receive a prevailing wage and project labor agreements, ensuring that Michigan’s clean energy future provides well-paying jobs that support families.
These laws were done the Michigan Way, with support and backing from major labor organizations throughout the process.
The Clean Energy and Jobs Act represents meaningful climate action — the first scale approach in state history — to expand clean energy, lower energy prices, and empower Michigan workers and communities, all while creating a cleaner, healthier future. But the work is not done!
Moving into 2024 and beyond, we must continue to work to ensure these investments are directly benefiting the Michiganders that need them most – vulnerable communities that have dealt with disproportionate impacts of a changing climate and rampant fossil fuel pollution for years.
The difference now? We have the tools to make it happen.