Coalition protests 500 million energy bill to Michigan customers

May 2, 2011
| By Jim Weeks |
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Last fall, a customer coalition was formed to protest an action by the federal government to force Michigan consumers to bear a disproportionate share of the cost to build high voltage power lines outside of this state. The cost to Michigan is unreasonable because these proposed power lines provide little or no benefit to our homeowners and businesses. Our customer coalition includes the Michigan Attorney General, Chrysler, Dow, Ford, GM and other large Michigan industrial customers, as well as Consumers Energy, Detroit Edison, Michigan's municipal utilities and the Michigan Public Power Agency. Our coalition is unique because its members represent public and private utilities and their electric customers, from the largest industrial customers to the smallest households.

Our protest involves a directive by the Federal Energy Regulatory Commission that will cause Michigan’s electric customers to pay for roughly 20 percent of the cost for new transmission built throughout the Midwest intended to assist states in meeting their renewable goals. Ultimately, this is likely to result in Michigan’s customers paying more than $500 million every year to build expensive high voltage electric transmission lines in other states. However, those lines would provide Michigan families and job providers with little or no benefit from the electricity delivered over them.

The proponents of charging Michigan for transmission that will not serve this state say it is the only way these new out-of-state transmission projects will be built, and that they are needed to facilitate competitive electricity markets, improve reliability and reduce the cost of energy. Those arguments simply do not explain why Michigan should be forced to pay for a disproportionate share of those costs.

Our customer coalition supports efforts to ensure that Michigan customers will have the most reliable electric service at the lowest rates. However, neither the FERC nor the organization representing the transmission developers have produced any studies demonstrating that Michigan customers will receive benefits even roughly equal to the costs of the new proposed transmission projects to be built in remote areas of Montana, North Dakota, South Dakota, Minnesota, or Iowa. We believe that Michigan ratepayers should pay for the cost of new transmission in proportion to the benefits that Michigan customers receive. Michigan’s renewable energy law was passed in 2008, and that law requires us to buy renewable electricity from generators located within Michigan. The proposed projects for these other states will not create Michigan jobs, lower our rates, or help us meet our state’s renewable requirements.

Our coalition is not protesting the need for new transmission, renewable energy resources or competition in electric markets. We are protesting to protect Michigan’s electric customers from unjust and unreasonable rate increases to fund transmission projects from which Michigan will receive little or no benefit.

Subsidizing the cost of transmission built to serve other states’ needs will have a devastating impact on Michigan’s economic recovery. Michigan businesses will be hit with rate increases that will affect corporate decisions, economic growth and destroy jobs. Michigan’s auto industry could pay more than $25 million per year in additional costs, universities $2 million to $3 million, and our larger municipalities more than $200,000 in increased annual costs.

Given this potential price tag, it should be no surprise that our coalition members have joined to protest this cost allocation plan that would subsidize other states at Michigan ratepayer’s expense. The Wall Street Journal and The Detroit News editorial pages have strongly supported the position of the customer coalition and called for appropriate action to protect Michigan. U.S. Sen. Debbie Stabenow has asked for a Senate hearing on the issue, and House Energy and Commerce Committee Chairman Fred Upton is evaluating similar action. State Rep. Amanda Price has introduced a resolution in the Michigan Legislature calling for fair treatment for Michigan ratepayers and State Sen. Mike Nofs, chairman of the Senate Committee on Energy and Technology, has expressed serious concern about the proposed allocation plan and has indicated he will hold hearings on the issue in the near future. The Michigan Public Service Commission has also requested the FERC to reconsider its decision and correct numerous errors in an a location formula that will harm Michigan.

From the beginning, our customer coalition has steadfastly argued that Michigan ratepayers should not be required to pay hundreds of millions of dollars each year for the construction of new transmission that provide no measurable reliability or economic benefits to Michigan citizens. The sole purpose of the customer coalition is to ensure that Michigan customers pay no more than just and reasonable rates for electric transmission. 

Jim Weeks is the executive director of the Michigan Municipal Electric Association, a trade association representing 41 municipally owned and operated electric utilities.

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