Electric Power Restructuring A Step Closer

May 7, 2002
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LANSING – The Michigan Public Service Commission took the state a step closer last month to restructuring the electric-power industry. The latest move had the MPSC approving a code of conduct for all regulated electric utilities and alternative suppliers.

The MPSC reported that the main objective of the code is to promote fair competition in the industry throughout the state. The commission intends to accomplish that by preventing cross-subsidization, information sharing and favored treatment between a utility’s regulated and unregulated services, whether those services are provided by the utility or its affiliate.

In essence, the code attempts to force an affiliate supplier of an electric utility to operate as a separate business.

Here are a few highlights of the new code:

  • A utility can’t subsidize an affiliate supplier or other separate entities.

  • An affiliate of a utility must keep separate books and records.

  • A utility can’t finance or co-sign loans for an affiliate supplier.

  • A utility can’t condition or tie service, or the availability of discounts, rates, other charges, fees, rebates or waivers, to taking goods or services from an affiliate.

  • A utility can’t share information it gathers with an affiliate unless the same information is given to competitors on the same terms at the same time.

So far, the MPSC has approved three alternative suppliers that are affiliates of regulated utilities.

CMS MTS&T Michigan LLC and CMS Marketing Services and Trading Co. are affiliated with Consumers Energy. The third, DTE Energy Marketing, is an affiliate of Detroit Edison. Both CMS firms are based in Jackson, while DTE Energy is in Ann Arbor

Consumers and Detroit Edison are the state’s largest electrical-power suppliers. DTE has 2.1 million customers, while Consumers has 1.6 million.

In all, the commission has approved 10 alternative suppliers.

The others are Engage Energy U.S. LP of Southfield, Nicor Energy LLC of Lisle, Ill., Nordic Electric LLC and Nordic Marketing LLC of Ann Arbor, Quest Energy LLC of Ann Arbor, Unicom Energy Inc. of Ann Arbor, and Wolverine Power Marketing Cooperative Inc. of Cadillac.

Next on the commission’s restructuring list is to learn how the utilities intend to improve the state’s transmission system.

“One of the key elements that the bill was slated to address was the fact that the transmission system needed upgrading,” said Gary Kitts, MPSC chief administrative officer. “It has to be a joint plan filed, essentially, by Consumers Energy, Detroit Edison and American Electric Power, or their affiliate.”

That report was due by year’s end.

The MPSC is also phasing in the consumer-choice portion of the restructuring plan.

“There are five small blocks that occur prior to the main opening on Jan. 1, 2002. We’re on schedule for all of those,” Kitts told the Business Journal. “So everything is on schedule.”

The restructuring effort emerged from Public Acts 141 and 142, which were signed into law last June by Gov. John Engler. The Consumer Choice and Liability Act, as it’s known, has capped electric rates for large commercial and industrial customers through 2003, and until 2004 for small-business customers.           

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