Every American uses electric service, but its price and reliability depends to some extent on the choices lawmakers make. This is a key point of a recent report that gives a snapshot of energy prices and policies in each state. Michigan, the report says, has above-average costs for electricity.

The Energy Affordability Report, which draws on federal data, says that 37 states have cheaper electricity than Michigan does. It is published by the American Legislative Exchange Council, which describes itself as “a voluntary membership organization of state legislators dedicated to the principles of limited government, free markets and federalism.”

State policies affect energy prices in three ways, the report mentions: renewable portfolio standards, net-metering requirements and cap-and-trade systems. Some states have all three policies, a few have none, and the balance, including Michigan, have at least one.

Michigan’s policy imposes a renewable portfolio standard on utilities that requires 50% of the electricity in the state to come from renewable energy by 2030 and 60% by 2035. The policy “contribute(s) to higher current electricity prices as utilities pass on the costs of developing new infrastructure,” according to the report.

A second policy contributing to the state’s above-average costs, the report says, is a net metering system. Under that system, modified in recent years to be a distributed generation program for new participants, utilities must pay customers whose solar panels generate more electricity than they need.

Michigan does not have a cap-and-trade system, which occurs mostly in the Northeast.

The state’s new portfolio standard threatens the electrical grid in Michigan, said Jason Hayes, director of fiscal policy at the Mackinac Center for Public Policy. “The state has chosen to exacerbate its grid problems by expanding its renewable portfolio standard, requiring 60% of all electric supplies to come from renewable sources. Our report, Shorting the Great Lakes Grid, reveals how state governments and utility net-zero plans have pushed grid operators to forecast severe shortages and price increases.” Hayes concluded by saying that policymakers should emphasize the importance of reliability and affordability.

A spokesperson for one of the state’s large utility companies told Michigan Capitol Confidential that economic growth key to making electricity more affordable. “As Michigan loses population and businesses, costs go up for everyone when they’re distributed among fewer customers,” said Tracy C. Wimmer of Consumers Energy. “Smoothing the path for significant economic development — and the accompanying rates those developments would pay over the lifetime of the project — could have significant benefit for all our customers,” Wimmer added.

Policymakers could make energy more affordable by altering the net metering law, Wimmer said. “Changes to current policy that will ensure that the entirety of our customer base is not forced to subsidize the small percentage that can afford to install their own solar will ultimately lower costs for all,” she told CapCon.

Higher electricity prices can be a challenge for household budgets, but they also have implications for businesses and in turn, economic development. Two states that have lower electricity prices are Kentucky and Tennessee. Ford Motor Co. cited lower electricity prices there as one reason for its 2021 decision to establish major facilities in those states.

The report on electricity describes where each state gets its electricity. States vary widely in which resources they use. The coal-producing states of West Virginia and Wyoming use coal the most, deriving 90% and 72% of its electricity, respectively, from it. Natural gas is key in many states, including Delaware and Rhode Island, which derive 89% of their electricity from it. Illinois gets more than half of its electricity (53%) from nuclear and four states get more than half their electricity from hydro. South Dakota is the only state to get most of its electricity (58%) from wind.

Michigan got its power from a variety of sources in 2023, the latest year the report used for its comparisons. Michigan’s energy sources were divided into natural gas (37%), coal (31%) and nuclear (23%). Wind and petroleum made up the balance, at 8% and 1% respectively. Michigan is one of 14 states that does not have a dominant supplier.