Government

Power struggle

Hearing set on proposal to open Michigan to all electricity companies.

March 14, 2014
| By Pete Daly |
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A bill proposed in the Michigan House to throw out the state’s 2008 electrical energy legislation will get a hearing in the Legislature Tuesday, with proponents and opponents possibly packing the hall.

State Rep. Mike Shirkey, R-Clark Lake, sponsored House Bill 5184, which would — among other things — end the existing 10 percent cap on the amount of electricity sold in the state by generators other than Consumers Energy, DTE and four other state utilities.

When introduced in December, Shirkey said it would “create a fully competitive retail electricity market in Michigan, which would end the monopoly-style system that economists claim has cost Michigan job providers and families $3 billion since 2008.”

Shirkey, who calls his proposed legislation the Michigan Electric Customer Freedom Act, said electricity prices have gone up an average of 2.7 percent nationally since 2008, but Michigan rates “skyrocketed by over 30 percent” during the same period.

Shirkey told the Business Journal his bill would also require Consumers Energy and DTE “to move their generation assets — in other words, their power plants — from a regulated entity within their corporate structure to an affiliate.”

“Or they can sell them to somebody else,” he added, explaining that all companies generating electricity for sale in Michigan would then “compete just like every other business in Michigan.”

The large utilities argue that their business demands a degree of regulation to maintain assured prices for their electricity because of the immense cost of building and operating power plants.

A spokesman for the Michigan Chamber of Commerce said it will oppose HB 5184 because it is “irresponsible,” “kneejerk” and “unbelievably complicated.”

Jason Geer, director of Energy and Environmental Policy at the state chamber, said the proposed bill would require the Michigan Public Service Commission to force the sale of the big utilities’ generating assets to a private investor.

“Clearly, who’s pushing this legislation is out-of-state utilities. They want to come in and buy up the assets of these Michigan-based companies so that they can create a better situation for themselves,” said Geer.

Out-of-state generating companies are supporters of Energy Choice Now, a group formed in 2010 to push for raising the limit on the amount of electricity customers can buy from alternative suppliers. Electricity supply was deregulated in Michigan from 2000 to 2008, with residents and businesses able to buy electricity over the grid from other than the in-state utilities. 

Energy Choice Now says it is “a coalition of businesses, consumers, suppliers, trade associations and other interested stakeholders” and lists scores of business members, including Herman Miller in Zeeland.

Wayne Kuipers, executive director of the nonprofit ECN, said he will be at the legislative hearing to speak for Shirkey’s proposal. He said it would not only give Michigan electricity consumers a 100 percent choice of their supplier, “but it also takes steps toward a smart re-regulation of the electric energy industry here in Michigan.”

That would be achieved by “requiring (the two major utilities) to separate from the generation” of electricity, either by establishing another company that owns it “or sell it off to somebody else.”

“It is far from deregulation. It is more sensible regulation, to match what is happening across the country,” said Kuipers.

Then there is the Michigan Jobs and Energy Coalition, also a nonprofit coalition with many member organizations representing business, labor and other organizations, and prominent among its business members are DTE and Consumers Energy. MJEC will be at the hearing Tuesday staunchly opposed to HB 5184.

“While obviously many of our members are strong proponents of a free market and competition, they also realize that electricity doesn’t fall into the same category,” said Steve Transeth, who directs energy policy at the MJEC.

The provision of electricity to the general public demands reliability, said Transeth, much like the delivery of public safety services.

Transeth said deregulation of the electricity industry has been a “debacle” in California and is causing “huge problems” in Texas. He said that in the past 14 years, nine states have “retracted, suspended” deregulation and moved back to re-regulation. Once 23 states were deregulated, but that number has dropped to 14, he added.

“The coalition doesn’t back down from the position that Michigan (electricity) rates need to be more competitive. What we are saying is that deregulation is not the answer, and time and time again, that has proven to only make things worse,” said Transeth.

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