The good news from the Gov’s energy speech


Governor Rick Snyder (via Michigan Municipal League)

Note: this post is republished from the Southeast Michigan Regional Energy Office blog.

On November 27, Governor Snyder delivered his Special Message on Energy and the Environment, laying out the policy vision that will guide him through the next several years. True to form, our “Tough Nerd” Governor had a healthy mix of complex issues and policy provisions, but his comments on energy efficiency stood out most as having strong potential benefits for southeast Michigan cities.

As Governor Snyder noted, “Energy Efficiency is the best example of a no-regrets policy Michigan can have. It makes us more reliable, more affordable and protects our environment.” Without even mentioning the jobs created by energy efficiency, the Governor drove home the point that efficiency is important, bipartisan and high on his administration’s list.

1. Michigan Saves Loans for Commercial Buildings

”This year, private financial institutions across the state will make more than $68 million available for efficiency improvements in buildings. That’s great news but that number needs to grow.”
– Governor Rick Snyder

Michigan Saves is an excellent example of a government-seeded nonprofit organization that operates with private funds. Energy efficient improvements are an excellent candidate for loans since the investments pay back so quickly. With payback rates 30 times better than regular loans, lenders can set lower rates for energy-related improvements. Our member communities are already familiar with Michigan Saves as the funding source for residential loans and as a key partner in the BetterBuildings for Michigan home energy program, and as the Governor announced, these loans will soon be available to commercial properties as well.

Expanding these loans to commercial buildings will give business owners one more financing option for energy-saving investments including lighting and cooking equipment, making it easier to keep their businesses healthy. Older buildings often reap the most benefit from efficient investments, so owners of older and less efficient downtown buildings may be able to reduce energy costs for their tenants and make their downtown locations more attractive.

2. Adding Energy to Home Inspections

“Legislation that would add energy efficiency information to those reports is needed, and I encourage the Legislature to act on a bill in the new year.”
– Governor Rick Snyder

It seems simple, but the policy prescription with the most potential impact is the Governor’s request to add energy efficiency to home inspections. Simply providing information about a home’s potential energy costs could help potential homebuyers make better decisions and gradually push the market toward encouraging higher efficiency homes. As home prices rise, this policy could also begin to favor the cities that are, like Regional Energy Office members, already starting to promote efficiency to their residents.

Governor Snyder couched this prescription in the context of providing information to help boost the private sector investment, but did not go so far as to encourage lawmakers to raise the statewide building codes to include federal efficiency standards. As a home rule state Michigan municipalities have the opportunity to raise standards on their own, but as with our renewable energy ordinance project, we know that lots of different sets of codes can be cumbersome. Still, municipalities can get started with rental inspections, even requiring landlords to share energy data with tenants. Washtenaw County is pioneering this ‘information sharing’ approach on renter-occupied buildings starting in spring 2013 with their Green Rentals program.

3. Geo-targeting Efficiency Investment

[Geo-targeting] means making smarter energy investments – spending on energy efficiency instead of new infrastructure in areas with reliability problems caused by high local demand.
– Governor Rick Snyder

Okay, I’ll be honest – I’m mostly just excited about this one because of the word “geo-targeting.” I’m picturing all kinds of cool maps with lots of Matrix-style data flowing through them. But the idea had some real potential for our member cities. The Governor is asking the Michigan Public Services Commission to analyze lots of usage data to determine where demand is exceeding infrastructure capacity. Investing in energy efficiency is far cheaper than trying to grow the area’s electric capacity, so these areas will be targeted with energy efficiency investments, making it easier for residents and businesses to become more efficient and reap the benefits mentioned above.

Much of this investment is likely to be directed toward Southeast Michigan, which has the oldest cities and the highest population density. The Governor specifically mentioned Ferndale, one of our member cities and a classic example of an older, inner-ring suburb with a high energy demand and aging infrastructure. During last summer’s many heat waves, Ferndale seemed to have a blackout every week due to high electricity demand from Air Conditioning. Efficiency programs like BetterBuildings for Michigan have made a small dent in the City’s energy demand, but Ferndale and other older cities are likely to see many more energy efficiency opportunities in the years ahead to try to get them on track.

All in all, the Governor’s speech may not have been groundbreaking, but there are are some unique opportunities and some common sense good ideas that our cities are poised to take advantage of. We’ll be keeping an eye on all of these as we get into 2013 and the next legislative session.