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Lansing \u2013 Last September, as state lawmakers and Governor Jennifer M. Granholm grudgingly agreed to tax increases and program cuts to balance the state budget, Consumers Energy submitted a study to the Michigan Public Service Commission meant to justify construction of a big, new, coal-fired power plant near Bay City.

But the study seems to be having the opposite effect, because it found that the cost of the proposed 800-megawatt, coal- fired generating station\u2014one of seven new plants proposed over the past year by var- ious energy companies for Michigan\u2014had more than doubled since its previous esti- mate, made last May. The report says the new plant will cost well over $2 billion, or more than $3,000 per kilowatt. And that was without the cost of the stringent fed- eral and state carbon pollution controls that are anticipated as one response to global warming and climate change.

That study, and others like it, are helping to convince state lawmakers, regu- lators, and Wall Street lenders that such plants, far from helping to secure Michigan's power needs in the 21st centu- ry, could instead turn out to be an eco- nomic calamity for the state\u2019s ratepayers.

The abrupt increase in Consumer\u2019s projected costs reflects a much larger trend affecting the entire American utility indus- try, one that prompted Wall Street lenders to issue a nationwide warning earlier this month about financing new plants. Now the price rise and the warning are influ- encing what Michigan lawmakers and interest groups here believe is the biggest legislative debate of 2008: Whether Republicans and Democrats can agree on new state policy to encourage development of cleaner, more competitively priced sources of electricity.

All of a sudden, say lawmakers and energy specialists, alternative sources of energy look like a better economic bet for Michigan, a state that is urgently seeking new ways to employ its people and rebuild its badly damaged manufacturing sector for the emerging 21st-century economy.

The quickening debate, which began in earnest early last year, is still fraught with substantive complexities of supply and demand. It also has stirred the famil- iar ideological struggles over government mandates, regulation, free markets, whether global warming is for real\u2014and the push by the state\u2019s largest utilities to eliminate "customer choice"\u2014the ability for ratepayers to buy their electricity else- where if the cost of power from new coal plants turns out to be as high as many are now predicting.

But lawmakers of both parties say that, sticking points aside, new data about the costs of coal and other sources of ener- gy have made the Legislature more com- fortable with alternatives. Some lawmak-

ers now say that passing a comprehensive energy package is possible this year, per- haps by June\u2014although Governor Granholm recently urged lawmakers to finish their work by the end of March or risk having an unnamed international company that she says wants to build five windmill factories in Michigan take their project elsewhere.

"There is some real momentum," for moving forward, said state Representative Howard Walker, a Republican from Traverse City. "It looks like the House wants to support renewable and cleaner energy. The process is led by the speaker of the House and the chairman of the House Energy and Technology Committee. And the Senate has been working on it too; they\u2019re holding hearings."

That is a development that two other important players who are often at odds\u2014 the Michigan Environmental Council and the Michigan Chamber of Commerce\u2014also say they want to see.

"I am confident that we are going to see a real good effort by the Legislature to try and encourage new options, including energy efficiency and renewable energy," said Douglas Roberts Jr., the director of environmental and energy policy at the Michigan Chamber of Commerce. "People recognize it's needed for Michigan to com- pete with other states that are already doing this. And there is a sense here that the Legislature needs to show voters they can work together to solve this state's important problems."

On February 18, Democratic House Speaker Andy Dillon, of Wayne County, tried to do that. He brought together four lawmakers and 20 representatives of key interest groups for more than 10 hours of negotiations on the four major provisions of a comprehensive energy proposal\u2014 mandates for more renewable energy, restrictions on customer choice, incentives for utilities to encourage energy efficiency, and requirements that utilities justify their proposals for new power plants.

The most important proposal would require Michigan to generate 10 percent of its power from renewable sources of ener- gy by 2015, said participants. The state generates a little more than 3 percent of its energy from renewable sources today, most of it from hydropower dams.

Such a "renewable portfolio standard," which more than 20 other states have passed, is the core of Governor Granholm's new economic development strategy. She and others assert that the standard would open a market for wind and solar energy that could prompt a new manufacturing and service sector boom generating thou- sands of new jobs in the state. Michigan has more than enough wind along the Great Lakes shoreline and inland, says a study by the Land Policy Institute at Michigan State University, to power 1,500 to 3,000 new windmills, and generate 3,000 megawatts of power\u2014enough to

"I don't think anybody is going to focus on us until we get serious about get- ting our renewable portfolio standard," Governor Granholm told the Lansing State Journal editorial board in early February. "How do we say as a state we are really in the game if we aren't even committed to using a percentage of our energy or our fuel from renewable resources?"

But detractors, including some envi- ronmentally minded residents, worry about the effects of so many new wind- mills on birds, scenic views, and the qual- ity of rural life. Business groups worry that local debates over siting the new mills will be arduous and drive up costs. Republican

Several officials in the Granholm administration said in interviews that they are sensitive to the grassroots anxiety, and are launching public education initiatives to reduce it. But they also noted that utili- ties and wind developers have already leased over 100,000 acres of land in Michigan, most of it pasture and crop land, to build new windmills in the state. That means that farmers and other large landowners will be important allies in rural townships to coax officials to grant operat- ing permits.