Election 2012 and energy recap

With yesterday's general election behind us, people across the United States are considering its impact on energy policy.  From President Obama's retention of the White House to state elections and ballot measures, voters have reshaped the energy landscape.  Here are some highlights:

• President Obama wins reelection.  Obama's win may mean "more of the same" when it comes to energy policy.  President Obama has indicated support for increased domestic production of natural gas and oil, as well as for programs to encourage the development of renewable electric generation.  While the U.S. Department of Energy remains under scrutiny for loan guarantees it offered companies like Solyndra, Obama's reelection likely means that the Department of Energy will not face as strong a shakeup as it would have under a President Romney.  Still, many observers expect Secretary of Energy Steven Chu to be replaced.  The U.S. Environmental Protection Agency will likely continue to develop regulations covering energy-related emissions such as ozone, coal ash, and sulfur from fuels.  These regulations have effectively been on hold pending the election.  EPA Administrator Lisa Jackson may continue to lead the agency.  Likewise, Interior Secretary Ken Salazar has indicated his desire to remain Secretary of the Interior; in Obama's second term, the Department of the Interior is likely to continue its current course in leasing land for oil and gas production as well as for renewable energy production.

• Congress remains divided.  At the federal level, Democrats held onto control of the Senate, while Republicans retained control in the House.  The chambers' partisan nature may lead to gridlock, or at least to consensus-based, relatively moderate measures as the only kind of legislation likely to meet the approval of both chambers of Congress.

• Michigan rejects constitutional amendment on renewable energy.  Michigan voters rejected a proposed amendment to the state constitution that would have increased the amount of renewable energy that utilities must buy to serve their customers.  Proposition 3 would have required electric utilities to generate at least 25 percent of their annual retail sales of electricity from renewable energy sources by 2025.  Only 36% voted in favor of the measure to increase the renewable portfolio standard, meaning the RPS initiative failed.

Other election results, ranging from congressional races to state governor contests, will also shape energy policy in 2013 and beyond.  People and businesses that can react quickly will be in a better position to capitalize on the election results.

How Election 2012 affects energy policy

Today voters across the United States cast ballots in the 2012 general election. At stake are a broad range of political offices, ranging from the presidency to local municipal roles. How will the election's outcomes affect energy policy, energy-related businesses, and consumers?

The presidential contest has drawn the greatest attention over the past year. Whether President Obama will retain his office or Governor Romney will take the White House is the largest question. Based on the candidates' past actions and current campaign platforms, voters have some sense of how each would exercise his presidential powers. On energy issues, both candidates appear to favor increased domestic production of natural gas and oil. The candidates differ in their philosophies on the role of governmental incentives and subsidies -- whether for fossil fuel production or for renewable electricity generation -- and on emissions regulations for coal-fired and other power plants. The candidates also disagree on specific energy projects and programs ranging from the Keystone XL pipeline to the Navy's Great Green Fleet biofuels initiative.

Beyond the presidency, federal elections will determine the composition of Congress. While energy policy is more sensitive to presidential changes than to individual congressional elections, the makeup of Congress drives federal energy policy in the aggregate. All seats in the House of Representatives are up for grabs, as are a third of Senate seats. Of the 33 Senate seats, Democrats need to win 21 seats to retain their majority while Republicans need to win 14 seats to take control. The senators elected in 2012 will participate in setting any national energy policy.

State elections will also shape energy policy for the coming years. Voters will select governors in 11 states, and state legislative offices are widely contested. While federal energy policy draws the most attention, the U.S. federalist system leaves significant authority to individual states to set their own policies on energy issues. For example, states may establish electric renewable portfolio standards or otherwise regulate the resource mix used to produce usable energy. The outcomes of state elections will also affect policies on energy efficiency, smart meters and smart grid infrastructure.

Voters in some states will also cast ballots on measures directly affecting energy policy, such as the Michigan citizens' initiative seeking to increase utilities' use of electricity produced by renewable resources.

It may be some time until all the ballots are finally counted, but by tomorrow night we will have a better understanding of the results for most of the races and ballot questions. Those who can translate the election results into an understanding of future policies - and business opportunities - will have a leg up on the competition.

Will Michigan vote for renewable energy as a constitutional amendment?

Voters will decide a broad slate of issues in the upcoming U.S. elections on November 6, including many that address energy policy.  Questions range from who will serve as president to the role of government in managing the mix of energy resources used to power society.  In several states, voters will decide whether to increase renewable energy mandates.  One example of such a question is Michigan Proposal 3, a citizen-initiated ballot measure that would mandate that 25% of the state's electricity must come from renewable resources by 2025.
Under current law, Michigan's renewable portfolio standard requires electric suppliers to procure at least 10 percent of electricity from renewable sources such as wind, solar, hydro and biomass by 2015.  If enacted, Proposal 3 would increase this RPS requirement to 25% by 2025, and limit the impact of the requirement on electric rates to no more than a 1% annual increase.

The official text of Proposal 3 reads:

PROPOSAL 12-3
A PROPOSAL TO AMEND THE STATE CONSTITUTION TO ESTABLISH A STANDARD FOR RENEWABLE ENERGY
This proposal would:

• Require electric utilities to provide at least 25% of their annual retail sales of electricity from renewable energy sources, which are wind, solar, biomass, and hydropower, by 2025.
• Limit to not more than 1% per year electric utility rate increases charged to consumers only to achieve compliance with the renewable energy standard.
• Allow annual extensions of the deadline to meet the 25% standard in order to prevent rate increases over the 1% limit.
• Require the legislature to enact additional laws to encourage the use of Michigan made equipment and employment of Michigan residents.

Should this proposal be approved?
YES __
NO ____

The effort to place this question on the ballot has been led by a group called Michigan Energy, Michigan Jobs.  Supporters project that the amendment would help the local economy by creating over 40,000 jobs and attract $10 billion in new investments, as well as promoting public and environmental health.  Opponents, including a group called the Clean Affordable Renewable Energy for Michigan Coalition or (CARE) argue both that the increased renewable mandate would cost too much and that such a measure does not belong in the state constitution.

How will Michigan voters respond to this issue?  We will find out within the next week.

June 9, 2010 update: Maine election results, including off-shore wind bond

Maine just held elections. Voters weighed in on gubernatorial candidates (Democrats choosing Libby Mitchell, and Republicans Paul LePage), a citizens' veto of a tax reform law enacted last session, and a series of bond measures, all of which appear to have passed.

One of these bond measures touches directly on energy policy.  Question 2 addressed offshore wind energy as well as energy efficiency and infrastructure across the state's public higher education systems.

Question 2 (Bond Issue):

"Do you favor a $26,500,000 bond issue that will create jobs through investment in an off-shore wind energy demonstration site and related manufacturing to advance Maine’s energy independence from imported foreign oil, that will leverage $24,500,000 in federal and other funds and for energy improvements at campuses of the University of Maine System, Maine Community College System and Maine Maritime Academy in order to make facilities more efficient and less costly to operate?”

The Maine Secretary of State's Citizen's Guide to the Referendum Election (DOC) provides more detail on the allocation. The bond package includes:

• $11 million for "research, development and product innovation associated with developing one or more ocean wind energy demonstration sites", plus "funding for robotics equipment to accelerate wind energy components manufacturing in the State"
•  $9.5 million for energy and infrastructure upgrades at all University of Maine System campuses
• $5 million for energy and infrastructure upgrades at all Maine Community College System campuses
• $1 million for energy and infrastructure upgrades at Maine Maritime Academy

 Of these provisions, perhaps the Maine Marine Wind Energy Demonstration Site Fund is most interesting. The Fund was established by Chapter 414, Part D, Public Laws of 2009, and was amended by Chapter 645, Part C, Public Laws of 2009. The Legislature established the Fund to "provide the basic investment necessary to obtain matching funds and competitive grants and other funding from federal, state and private sources for research, development and product innovation associated with developing one or more ocean wind energy demonstration sites."

The Fund is designed to funnel money into research by the University of Maine. In fact, the definition of "research and development" enacted in Section H-1(2)(B) of the Public Law limits it to "applied engineering and scientific research and related commercial development conducted by the University of Maine", although partnerships are allowed. The Fund is administered by the University itself, on behalf of the trustees. Funds could be used to conduct siting studies for offshore wind sites, and to design, develop prototypes for, and test offshore structures, composites and components that could be manufactured in Maine.

As often seems needed in pitching a bond proposal, this one is designed to leverage matching dollars. The Secretary of State reported that it is anticipated that funds from this portion of the bond proceeds would leverage $24,500,000 in additional funds from other sources.

What does it cost? Total estimated life time cost is $33,058,750 representing $26,500,000 in principal and $6,558,750 in interest (assuming interest at 4.5% over 10 years).

Voters approved Question 2 by a 59/41 margin. 133,763 votes were cast in favor of the bond package, with only 94,016 against.

It will be interesting to see what comes out of the Maine Marine Wind Energy Demonstration Site Fund that we have all agreed to fund!