Report: Line 5 Pipeline Disruption Would Cost Upper Peninsula Taxpayers Tens of Thousands of Dollars

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by Bruce Walker

 

A new report challenges efforts conducted by Gov. Gretchen Whitmer’s administration and Attorney General Dana Nessel to not only shut down the Enbridge Line 5 pipeline under the Straits of Mackinac but prevent its replacement with a $500 million tunnel 100 feet below the lake bed.

The report also challenges 14 recommendations published last April by the Upper Peninsula Energy Task Force, a group established by the governor and chaired by Michigan Department of Environment, Great Lakes and Energy (EGLE) Director Liesl Clark.

The committee was tasked with compiling recommendations to ensure reliable, affordable and environmentally safe energy in the UP in the event of a disruption of Line 5. The committee’s work resulted in 14 recommendations, which were submitted to the governor in April.

“Assessing the Costs of the U.P. Energy Task Force Committee Recommendations” was released Sept. 10, and authored by Mackinac Center for Public Policy Environmental Policy Director Jason Hayes and Isaac Orr, policy fellow at the Minnesota-based Center for the American Experiment.

Hayes and Orr assert the political battle over Line 5 is more likely to disrupt the availability of reliable fuel in the UP than petroleum industry shortages or extreme weather events. Any interruption of propane in the UP, the authors write, “would most assuredly come as a result of state government policy.”

According to Hayes and Orr, using data compiled by the Statewide Energy Assessment, Michigan is the largest consumer of residential propane in the United States. Approximately 23,000 residential homes, or 18.6 percent, in the UP are heated by propane, which accounts for 78 percent, or 26.67 million gallons, of all propane consumption in the UP.

“The principal reason residents might experience a disruption of the Line 5 pipeline is an ongoing effort on the part of Michigan’s attorney general and governor to permanently decommission Line 5,” the authors wrote. “As part of that effort, Nessel and Whitmer have also both committed to stopping the Line 5 Straits of Mackinac tunnel agreement, which was approved in December 2018.”

Responding to the Task Force recommendation to switch UP homes using propane to an alternative home heating option, Hayes and Orr claim the price to homeowners would be an exorbitant $3,400 to $3,900 per year. Additionally, they contend, switching from propane heaters to heat pumps could cost each house currently using propane approximately $25,000.

All told, Hayes and Orr estimate the costs of retrofitting from propane to another energy source for UP homeowners would be between nearly $15 million for a low-end project and $470 million for a high-end project. They add those numbers do not include any interest the homeowners would incur for the loans they might have to repay for the retrofitting.

In a statement, Hayes noted: “The Upper Peninsula Energy Task Force’s recommendations need to be recalled and reconsidered.” He added: “These policies are the reason people across the state, and especially the U.P., are facing fewer energy choices and higher prices, not some caprice of nature, geography or energy markets.”

The Task Force also recommended the state adopt price-gouging legislation, which would apply to both wholesalers and retailers to ensure fair prices for consumers. Hayes and Orr counter that a regulator’s perception of gouging can be a business’ attempt to satisfying its customers in a timely fashion. “[L]egislation that places an artificial ceiling on the price of a commodity can prolong the shortage of that product when it is needed most.”

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Bruce Walker is a regional editor at The Center Square. He previously worked as editor at the Mackinac Center for Public Policy’s MichiganScience magazine and The Heartland Institute’s InfoTech & Telecom News.
Photo “Mackinac Bridge” by ElementBroccoli. CC BY-SA 4.0.

 

 

 

 

 

 

 

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