Traverse City News and Events

An Electrifying Debate: Cherryland Electric Pushes Back Against New Energy Waste Reduction Legislation

By Craig Manning | July 15, 2023

Two-hundred-fifty-four tons: According to northern Michigan’s Cherryland Electric, that number constitutes the amount of greenhouse gas the utility was able to keep out of the atmosphere in 2022 thanks to a new rebate program that incentivizes utility members to purchase and use sustainable, energy-conscious technologies. Per Rachel Johnson, who took over as Cherryland’s CEO in June, that amount of greenhouse gas reduction constitutes “roughly the equivalent of the carbon captured by 12,700 trees annually.” In 2023 so far, the utility has already prevented another 241 tons of greenhouse gas emissions through the same program.

Those numbers are by far the biggest greenhouse gas reduction statistics in Cherryland Electric’s 84-year history. Despite the success, though, Cherryland’s new rebate program could fall by the wayside if a piece of pending state legislation finds its way to the governor’s desk.

Cherryland’s current rebate program is a descendent of an older energy waste reduction (EWR) program that was mandated by the state. As Johnson explains it, that program required Cherryland to “incentivize a 1 percent reduction in our electric sales annually by offering rebates to our members for Energy Star appliances and lighting upgrades.”

For background, the Energy Star program was launched in the 1990s by the United States Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE). To this day, the program sets energy efficiency criteria for manufacturers to hit with certain types of products. From refrigerators to coffee makers to laptops to lightbulbs, countless products have been labeled with the Energy Star symbol over the past three decades to communicate energy efficiency to consumers. According to the Energy Star website, the program has “helped American families and businesses save 5 trillion kilowatt-hours of electricity, avoid more than $500 billion in energy costs, [and] achieve 4 billion metric tons of greenhouse gas reductions.”

Between 2009 and 2021, Cherryland Electric was required by Michigan to run an EWR rebate program based largely around Energy Star products. In 2021, though, Johnson says the state allowed that particular program to “sunset for municipal and cooperative utilities” – a category which includes Cherryland. Larger utilities, such as Consumers Energy and DTE Energy, are still following the EWR rules.

“The idea behind that sunset, when it was written into the law in 2016, was an understanding that the longer we did [the state-mandated EWR program], the less readily available the savings there would be,” Johnson explains. “The state realized that co-ops and municipal utilities were going to need the ability to adapt their programs to be more flexible after 12-13 years of administering under really narrow rules.”

Once the EWR rules went away, Cherryland pivoted its rebate program to focus on incentivizing greenhouse gas reduction. The switch added rebates for things like electric vehicles, heat pumps, mini splits, electric lawnmowers, and more. Many of those items, Johnson tells The Ticker, were things that Cherryland members had asked to be rebated for years, but weren’t eligible under the old rules.

So far, Johnson says Cherryland has seen plenty of evidence that the new rebates are “influencing member buyer behavior” by helping subsidize and incentivize members in making big sustainability investments. At the same time, though, the changes to the cooperative’s rebate program represent not just an expansion of the old program, but a shift in the very ideology behind the program. And now, that ideological shift is triggering some statewide debate.

On paper, the two programs – the old state-mandated EWR and Cherryland’s newer and more flexible rebate approach – seem to align. Both are ultimately about encouraging consumers to improve their energy efficiency and overall sustainability. The difference is that the old EWR program was all about reducing electricity usage. An Energy Star refrigerator, for instance, uses less electricity than a non-Energy Star refrigerator, which is why utilities could achieve the mandated 1 percent reduction in annual electric sales by rebating Energy Star products. Cherryland’s new program, meanwhile, often results in the opposite impact: members buying and using more electricity.

“We’ve all started to embrace this idea of greenhouse gas reduction instead of EWR,” Johnson says, speaking for Cherryland and other utilities in the state that have made similar pivots in the past two years. “Often, the best way to reduce greenhouse gas emissions is switching from fossil fuels to electricity. So, unlike the state-mandated EWR program, many of the technologies we are rebating do not lead to lower sales. Conversely, they grow new electric sales because the member benefitting from the rebate is often transitioning from a fossil fuel to our 62 percent carbon-free electricity.”

The problem with this approach, Johnson says, is that it can make it look like co-op and municipal utilities stopped trying to reduce energy once they were unshackled from the state’s EWR program. That program was based largely around kilowatt-hour tracking, and utilities like Cherryland are recording more kilowatt-hours – and making more money – by adopting greenhouse gas reduction programs that encourage members to buy things like electric cars.

“I think [state legislators] maybe look at those numbers and assume we’re not doing anything,” Johnson says.

Currently, there are two bills in the Michigan legislature – Senate Bill 0273 and House Bill 4761 – that would bring cooperatives and municipally-owned utilities back under the state’s EWR program. The bills would also enforce stricter energy reduction metrics, requiring all electricity providers to achieve at least a 2 percent reduction in their annual electricity sales through their rebate programs. If passed, the legislation would effectively require Cherryland and other utilities to abandon their new greenhouse gas reduction focus.

Johnson is adamant that passing these bills would represent “a step backwards” for utilities like Cherryland, for their members, and for the larger quest toward environmental protection. But the good news, she says, is that utilities share plenty of common goals with the legislators supporting these bills. For instance, the state senator that introduced Senate Bill 0273, Sam Singh, touted the legilsation as a way to “address climate change,” “reduce carbon emissions,” and “make Michigan a leader in environmental resiliency and sustainability.”

“I do believe that these bills are a starting point, and I believe that over the next six months or so, there are going to be a lot of revisions happening on them,” Johnson concludes. “So far, we’ve been lucky that our local legislators have been open to this conversation with us. We're going to continue those conversations as these revisions happen. This summer, while our legislators are home, our number one priority is just making sure we're spending time with them and introducing them to what we're doing. Because I sincerely believe if they see what we're doing, they're going to be excited about it and want to protect it.”

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