Guest column: Electric deregulation cap protects customers

The out-of-state power marketers are at it again. They’re pushing to expand electric deregulation in Michigan under the guise of “competition.” As usual, they’re promising a brighter, better future for the state’s families and businesses, if they can just get their way.

An old saying applies here: “If it looks too good to be true, it is.”

They carefully avoid many important facts about expanding deregulation, primarily the cost. In particular, they’ll never admit that expanding electric deregulation would benefit a relative handful of customers, while pushing bills higher for every other customer.

The impact on customers would be staggering: An estimated $900 million. That’s the annual cost by 2016 of legislation introduced by Rep. Michael Shirkey, R-Clarklake, and Sen. Arlan Meekhof, R-West Olive. Residential customers and small businesses would be the biggest losers under the Shirkey-Meekhof legislation.

Their legislation would attack the provision in the 2008 energy law that sets aside 10 percent of the state’s electric market to be served by out-of-state power marketers.  The Shirkey bill would double the deregulation cap to about 20 percent immediately, and then allow the out-of-state power brokers to take nearly 40 percent of the state’s energy market by 2016.

While the out-of-state power marketers and a handful of customers would be winners, the remaining customers would be losers because more of the utilities’ fixed costs would be shifted to them, pushing up their bills.

The 10 percent cap on deregulation was put in place to protect families and businesses from the sort of massive cost shift that would take place under the Shirkey-Meekhof legislation.

A major legislative panel -- the Michigan Senate’s Energy and Technology Committee -- conducted six weeks of hearings late last year to evaluate the performance of the 2008 energy law, including the 10 percent deregulation cap.

After hearing testimony from more than 60 witnesses, the committee chairman, Sen. Mike Nofs, concluded the 2008 energy law was performing well and there was no need to set aside more of Michigan’s electric market for out-of-state marketers.

Leading up to the 2008 law, Michigan learned that deregulation failed to lower power costs, led to unpredictable spikes in prices, and discouraged investments in the state’s power generation system. Plus, it left Michigan without a long-term plan to make sure the state would have the power and energy infrastructure it would need to grow and thrive in the future.

The Shirkey-Meekhof bills would discourage investments in Michigan’s electric system by creating a great deal of uncertainty in Michigan’s energy market.

The deregulation cap provides the financial certainty that Michigan’s hometown energy providers, such as Consumers Energy and DTE Energy, need to make substantial investments to serve customers and improve the environment.  Those two companies and Michigan’s other utilities are investing billions of dollars in our state to make sure families and businesses have a safe, adequate, and reliable supply of energy. Plus those investments create jobs and help boost the state’s economy. 

The out-of-state marketers aren’t committed to Michigan. They don’t invest in Michigan, they don’t create jobs, and they don’t live in our communities. When market conditions change, they’ll leave Michigan, just as they’ve done before.

For those of us who live and work here and are committed to this state, the answer is clear: Ignore the hype and promises of the out-of-state power marketers and maintain the proven energy policy that is safeguarding Michigan’s energy future.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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