Michigan Lawmaker Stands Up for Consumers

Michigan State Senator Cameron Brown has announced plans to introduce legislation raising the state’s limit on electricity market competition to 30 percent, according to the trade publication Electric Power Daily. This action signals new promise for consumers facing rising electricity rates in a beleaguered economy.

Last August, and again in December, electricity consumers in Consumers Energy and DTE Energy’s respective service territories reached Michigan’s 10 percent limit on consumer choice for electricity.  This left 90 percent of the electricity demand for those two utilities — which serve the vast majority of the state’s consumers —without a lower-cost alternative to their monopoly utility provider.

The fact that these caps were met so quickly clearly shows that consumers are not content with monopoly limitations. While we encourage Senator Brown’s efforts to raise the cap to 30 percent, it would still deprive 70 percent of the incumbent utilities’ demand of lower cost alternatives. Senator Brown has previously indicated he would consider eliminating the cap altogether, which we at COMPETE advocate.

In a deal with the Michigan Department of Environmental Quality, Consumers Energy received the 10 percent cap’s monopoly protections in support of building an 830-MW coal plant at a cost of $2.3 billion. Consumers Energy and DTE Energy now say they are opposed to modifying the cap because, according to company spokespersons, the energy providers need assurances that ratepayers will get stuck paying the tab before “embarking on such massive spending plans.” This is in clear contrast to competitive markets where investors, not ratepayers, bear the financial risk of investments.

The opportunity to obtain electricity at rates cheaper than those available from the two monopoly utility providers is stimulating support for competition.   “The price of electricity continues to go up, there’s a greater awareness of how competition has constrained rates here in Michigan, and we’re going to see the momentum build,” said Barry Cargill, executive director of the Customer Choice Coalition.

As former Energy Secretary Federico Peña has observed, absent legislative change, Michigan’s cap on electricity competition makes it impossible for Michigan companies and non-profit organizations to lower their electric rates by exercising their options to explore the market and select a competitive supplier.

We urge Senator Brown to lead an effort to eliminate the cap altogether. Michigan legislators should not leave consumers out in the cold as they struggle against challenging economic conditions.

Joel Malina | January 11, 2010