Capitol News
December 2015
In November, the Legislature met for only 5 days due to the hunting and Thanksgiving break, returning December 1 for 9 days of session in December. Only a third of legislators have hunting licenses, but they still schedule themselves a vacation to catch opening day of the deer hunting season. Winter holidays begin December 18 and end with the Legislature’s return on January 13.
Energy
No doubt you have seen TV ads paid for by Citizens for Michigan’s Energy Future (financed by the two big energy companies in Michigan, Consumers Energy and Detroit Edison). The ads imply a looming energy shortage and urge support of the “Nofs-Nesbitt” energy plan, SB 437 and HB 4298. The two sponsors are Sen. Mike Nofs (R-Battle Creek), Chair of the Senate Energy and Technology Committee (and retired Michigan State Police) and Rep. Aric Nesbitt (R-Lawton), Chair of the House Energy Policy Committee. The bills are important because nine coal plants close in April 2016 due to age and federal environment regulations, and the 10 percent renewable energy portfolio standard is expiring at the end of this year.
Bi-partisan support and opposition — Although the Senate is still working on its bill, the House Energy Committee reported out HB 4298 (version 9) 18 to 7, along with HB 4297, and HB 4575 after nearly 7 hours of hearings on November 11. Five Republicans and two Democrats voted No on the main bill, HB 4298.
The House bills make a number of changes to the state’s energy laws. House leadership has indicated it intends to take up the bills by the entire House before the holiday break.
HFA analysis — According to the House Fiscal Agency analysis of House Bill 4298, it would, among other things, amend the Michigan Public Service Commission Enabling Act to do the following:
- Retain the current level of 10 percent customer choice of energy providers but:
- Require a customer on the waiting list for service from an alternative energy supplier (AES) to wait an additional 20 years if the customer turns down the option when offered.
- Require written notice of an AES customer’s desire to return to an electric utility; under certain situations, require the returning customer to bear any additional costs of the utility for providing that service; and require the customer to stay with the utility for either 15 or 20 years, as applicable, before eligibility to switch back to an AES.
- Add a new section that requires the establishment of statewide energy modeling assumptions for integrated resource plans (IRP).
- Require the Michigan Public Service Commission to approve an IRP that is the most reasonable and prudent plan to balance certain specified conditions, one condition of which includes as a goal (not a mandate) that not less than 30 percent of electric energy needs would be met through a combination of energy waste reduction and renewable energy by 2025.
- Allow the use of incentives to spur waste reduction programs by utilities to help customers save energy.
- Require five-year resource adequacy assessments by electric providers regarding expected peak demand, reserve margins, and capacity.
- Allow three-year contracts for meeting projected capacity needs.
- Increase the membership of the MPSC by two, and require one commissioner to be a member of the general public.
- Allow gas utilities with fewer than one million customers to seek partial and immediate rate relief.
- Sunset the “file and use” provision that enables a utility to self-implement rate changes if the MPSC does not respond to a petition within 180 days, and the current method for a utility to refund overcharges to customers resulting from self-implementation.
- Require a refund of any electric or gas overcharges caused for any reason to be returned to the customer with interest, but provide the refunds only to industrial customers.
- Reduce, from 12 months to 10 months, the time period for the PSC to reach a final decision on a rate change request and also for the PSC to consider an amended petition.
- Lower the threshold from $500 million to $100 million for projects by electric utilities that trigger an application for a certificate of necessity (CON).
- Ensure that all customers of an electric utility have access to affordable, reliable, and safe utility service from an alternative source before the utility is allowed to discontinue service to those customers.
- Allow energy optimization programs or cost-based rates for K-12 schools, community colleges, and universities designed to achieve electricity cost savings.
- Allow review by the Court of Appeals of an MPSC order approving an IRP regarding conformity with the state and US Constitutions and state and federal laws.
- Revise the act’s title to prescribe the power and duties of certain state agencies.
Contentious issues — Although the House bill keeps the 10 percent set-aside for energy choice consumers, it would put new and onerous regulations on alternative suppliers if there was a capacity shortfall projected and make former choice users stick with returning to energy producers for a considerable period of time. With a long waiting list of those wanting more consumer energy choice to use AESs, the environmental activist community pressing for a higher renewable energy requirement with penalties (not just a goal), the building trades wanting to build more plants (provide more jobs) now and manufacturers wanting assured low rates and unending supply, the issue has been boiling on all sides for several years.
Reactions — Governor Snyder said in a statement the legislation will lead the state “toward a more adaptable, affordable, reliable and environmentally protective energy future.” He said “The bills now headed to the House floor would be a victory for Michiganders and a positive step in the long-term direction of our state. The package helps us continue with the progress we have made on competitiveness and affordability. It also addresses our goal of controlling our own destiny on energy. Decisions about our state’s energy should be made in Michigan and not in Washington, D.C.”
Wayne Kuipers, Energy Choice Now executive director, said the bill would kill electric choice, which has saved $1.1 billion for those “lucky enough” to have it. “The process of passing this utility-friendly/consumer-hostile legislation out of committee was as flawed and damaging as the bill itself,” he said in a statement. “No public testimony was allowed on what was essentially - as verified by the governor’s own energy advisor - a brand new bill before the committee. The bottom line is: the members of this committee just passed a bill that will potentially cost 40 percent of Michigan’s public schools $24 million annually and cost Michigan job providers nearly $100 million each year.”
And environmental advocates said the bills do not go far enough. “The only way to hold utilities accountable for increasing our use of clean, renewable energy is through mandates for renewable energy and energy efficiency,” Anne Woiwode, conservation director for Sierra Club, Michigan Chapter, said in a statement. “The Nesbitt bill is a giveaway to utility shareholders and puts polluter profits before Michigan’s ratepayers and natural resources.”
Data Center Tax Exemption
On November 11 three bills in the House and three in the Senate were introduced that would allow data centers to be exempt from sales, use, and property taxes under certain conditions. It also would exempt “co-located businesses,” or clients of the data centers, from those taxes. The bills are intended to entice Switch, a Nevada-based data storage center to locate a facility at the former Steelcase Pyramid in Gaines Township, Kent County. Some of Switch’s clients include companies like Amazon, eBay and Intel. The bills are HB 5074, HB 5075, HB 5076, SB 616, SB 617 and SB 618. Twenty other states have tax exemptions for data centers.
The House Committee reported the bills on Wednesday, December 2 but the full House is taking some time to ponder the potential General Fund and School Aid Fund revenue hit (in the tens of million dollars) as well as the potential revenue created from state income taxes. The Senate reported the bills out of Committee in the morning of Thursday, December 3 and passed them in the full Senate in the afternoon.
About Switch — Switch currently operates in Las Vegas and Tahoe-Reno, both in Nevada, and has a location in Luxembourg known as SuperNAP International. A 2 million-square-foot, $5 billion data center campus is anticipated. “The campus will create thousands of well-paid construction jobs over the estimated 10-year build out of the entire project. Similar to their construction projects in Nevada, a vast majority of Switch’s contractors will be hired from the local workforce,” Switch said in a statement. “In addition, at full-build out Switch and its clients are projected to employ 1,000 people to work in the data center campus.” Pending passage of the legislation, SUPERNAP Michigan would be the largest data center campus in the eastern United States, Switch said.
The company said it sought a location - similar to its home base in Nevada - that would be able to serve its necessary major markets without the obvious increased risk of natural disasters associated with coastline locations. Geographic safety is critical,” it said in its statement.” Its location in Las Vegas, for example, is seven milliseconds from Los Angeles and 14 milliseconds from San Francisco. And SUPERNAP Tahoe-Reno, the company’s most recent expansion, is six milliseconds from Silicon Valley and 14 milliseconds from San Diego. Michigan’s advantage, other than fewer natural disasters, Switch said, is its data center operations to be two milliseconds from Chicago and 14 milliseconds from New York, among other major population hubs, “without being burdened with the high power prices, taxes and earthquake/hurricane risks associated with those cities.”
If passed and signed by Governor Rick Snyder, the legislation would mean a major shift in policy as he has in the past opposed enacting one-time, special case tax expenditures. Recall the film industry subsidies recently nixed.
Straight Ticket Voting
Measures in the State Senate and House would eliminate the ability for voters to vote for all the candidates of one party by a single selection, commonly called straight-ticket voting. The full Senate added language to SB 13 to place a $1 million appropriation in the bill, which would make it referendum-proof.
A spokesperson for the Michigan Association of Municipal Clerks testified that eliminating straight ticketing voting would create long lines at the polls because it would add at least 30 seconds to the time needed to vote for those who usually vote a straight ticket. In some communities, that is over half the voters. We are already among the states with the longest lines on election day.
Absentee voting — In the House, Rep. Lisa Posthumus-Lyons (R-Alto) has put forward HB 4724 that would permit no-reason, in-person, ID-required absentee voting in addition to the current 6 statutory reasons to help cope with the longer lines the Clerks anticipate. She is considering tie-barring HB 4724 to SB 13, but some Senators are opposed to no-reason absentee voting.
And Rep. Gretchen Driskell (D-Saline), the minority vice chair of the House Elections Committee, said she and the committee’s two Democrats abstained on HB 4724 because the bill requires those wishing to vote an in-person absentee ballot to present photo identification at each election. Ms. Driskell said those who apply in person with photo identification the first time should be added to the clerk’s roll of people who regularly receive with each election an application for an absentee ballot in the mail. “For people who have difficulty getting to the polls, they’re going to have just as much difficulty getting to city hall, actually probably more, because the polls are usually open longer than city hall is open,” she said.
Michigan Democratic Party Chair Brandon Dillon criticized the Senate’s passage of the SB 13. “This is yet another way for Republicans to restrict the ability of voters to vote the way they want. The people of Michigan already decided this issue in 2002, when over 60 percent of voters elected to keep straight-ticket voting as an option on our state’s ballots,” Mr. Dillon said. “Whether you’re a Democrat, Republican, or an independent, straight-ticket voting is used by voters of all stripes, for many reasons, none of which require explanation to GOP lawmakers. We should be doing whatever we can to make voting easier for people, not taking away options to make it harder.”
Lonnie Scott, executive director of Progress Michigan, alleged the bill was a direct response to voters rejecting Republican candidates for statewide education board elections in the 2014 elections though Republicans won most state-wide races. “Senate Republicans proved that they are afraid to face the voters of Michigan and instead are continuing to use their legislative majority to rig the rules in their favor,” he said in a statement. “This bill does nothing to advance democracy in Michigan.”
Anti-union bill advances
In some instances, collective bargaining agreements include provisions that provide for employer-paid union release time. Such provisions allow an employee to take paid time from work to attend to union matters, such as addressing workplace grievances or labor contract administration. SB 0280 sponsored by Sen. Marty Knollenberg (R-Troy) would amend the Public Employee Relations Act (PERA) to prevent public employers and public employee union officials from negotiating in collective bargaining agreements paid leave time to conduct union business, although it would still allow for unpaid leave time. Police, fire and county or state corrections officers would be exempt under the policy.
PERA typically hasn’t applied to state workers because they’re governed by Civil Service Commission rules. But a recent Michigan Supreme Court decision deciding that the CSC lacked the authority to require union dues could be used in the future to further usurp the CSC authority over collective bargaining. The Michigan Corrections Organization testified against the paid union time ban and United Auto Workers Local 6000 has launched a campaign against the bill.
On November 10, the bill passed the Senate 20-17 with Republican Sens. Tom Casperson(R-Escanaba), Ken Horn(R-Frankenmuth), Rick Jones(R-Grand Ledge), Margaret O’Brien (R-Portage), Dale Zorn(R-Ida) and Tory Rocca (R-Sterling Heights) joining the Democrats in opposition. The bill contains an appropriation, making it referendum-proof. The bill is now in the House Committee on Commerce and Trade.
Ballot proposals
The Board of State Canvassers has twice turned down the petition language to recall Governor Snyder. The sponsor of the measure is coming back with a third try.
Fair Michigan, a ballot committee proposing to add sex, sexual orientation and gender identity to Michigan Constitution’s equal protection provision is running into surprising opposition from the American Civil Liberties Union and Equality Michigan. The latter think there is still a chance to get statutory changes to Michigan’s Civil Rights Act through the Michigan Legislature and want more time to educate voters about transgender issues.
Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.
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