Ad opposing electric deregulation oversimplifies

How we make the call

Truth Squad assigns five ratings to the political statements we review, in descending levels of accuracy:

Accurate
No factual inaccuracies in the statement and no important information is missing
Mostly accurate
While the statement is largely accurate, it omits or exaggerates facts, or needs some clarification
Half accurate
Truths are interspersed with mistruths, or the speaker left out significant facts that render his/her remarks misleading in important respects
Mostly inaccurate
The major point or points made are untrue or misleading, even while some aspects of the claim may be accurate
False
The statement is false, or based on false underlying facts

Who Citizens for Energizing Michigan’s Economy
What “California” television ad
The call Warning

Two versions of this ad, one 15 seconds and the other 30 seconds, were produced by Citizens for Energizing Michigan’s Economy (CEME), an organization that is opposing House Bill 5184, which would allow providers from outside Michigan to sell more electricity in the state.

The ad is one of eight radio and television ads CEME has run claiming a variety of problems associated with electric deregulation in other states.

Under current law, outside electric providers are capped at selling an amount equal to 10 percent of Michigan’s electric market. The cap was reached in 2009.

HB 5184, introduced in December by Rep. Mike Shirkey, R-Clark Lake, would eliminate the 10 percent cap and “open Michigan’s electricity market to full competition."

The state’s two largest electricity providers, Consumers Energy and DTE Energy, oppose the bill. The utilities argue that opening the state electricity market would boost rates and make the state’s electric service less reliable.

They also say opening the state’s electric market to full competition would not adequately compensate them for the billions of dollars of investment the utilities have made under the current regulatory structure.

Proponents of deregulation note that Michigan residents and businesses already pay the highest electric rates in the Midwest and say more competition would bring rates down.

CEME was registered on Dec. 12 with the state Department of Labor and Regulatory Affairs as a 501(c)(4) “social welfare organization,” formed to opposed electric deregulation in Michigan.

Its articles of incorporation list Eric Doster, a Lansing election law attorney, as its resident agent. Documents filed with the Federal Communications Commission identify Lansing public relations executive John Truscott and Howard Edelson as CEME directors. Edelson managed the Clean Affordable Renewable Energy for Michigan campaign, which helped defeat a 2012 ballot proposal that would have boosted Michigan’s renewable energy standard. Truscott’s firm, Truscott Rossman, handled public relations for the CARE campaign.

CEME has not revealed any of its financial backers, but a spokesman for Consumers Energy told MLive.com that it is financially backing the group.

Energy Choice Now, an organization that has long supported more electric competition in Michigan, contends CEME has spent more than $100,000 in television ads.

Statements under review:

“When California deregulated their electricity, they had rolling blackouts. Soaring electric bills. And while Californians were left in the dark, out-of-state energy companies like Enron raked in millions.”

California partially deregulated its electric power system in 1996. The ad is correct in stating that a crisis ensued, resulting in rolling blackouts and companies such as the much reviled Enron profiting from it.

But the ad’s implication that deregulation was the cause of “soaring electric bills” in California is problematic. As authority for this claim, the ad cites a report on California’s deregulation by the PBS news program “Frontline.”

As “Frontline” noted, deregulation in California was motivated by electric rates that were, on average, 50 percent higher than elsewhere in the country.

Retail electric prices were capped under the state’s deregulation plan while the state’s utilities sold off their generating plants. And that was a big part of the problem. Utilities and other electric providers couldn’t recover their costs because energy prices rose far above what policymakers anticipated. A catastrophic mix of complex events occurred in 2000, from drought that reduced the hydroelectric power produced by the state to record heat, resulting in rolling blackouts and skyrocketing energy prices to consumers. In short, it is a stretch to isolate deregulation as the cause of spiking prices, at least based on the “Frontline” report.

“Now some state legislators want to deregulate Michigan’s electricity. Would that be wise? Call them now. Tell them no to higher bills, blackouts and price gouging.”

Electric deregulation has been a hot-button issue for years with supporters claiming savings for consumers and opponents claiming costs will rise and reliability could suffer.

About 15 states have some form of electric deregulation, according to the U.S. Energy Information Administration.

Seven other states have suspended deregulation.

On its website, CEME cites a series of fact-supported problems, including price hikes, in some of these deregulated states.

In recent years, there have been calls for California lawmakers to again consider deregulation to save costs, with supporters saying California's wholesale power market has been completely redesigned since 2001, effectively protecting consumers from a repeat of the energy crisis.

The call Warning

The ad correctly summarizes what happened in California’s energy crisis. But it oversimplifies the situation and ignores steps have since been taken to address the problems that occurred in California’s wholesale electric market.

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Comments

Mike Svendsen
Thu, 04/03/2014 - 7:32pm
This whole HB 5184 is stupid and if the Bridge Magazine is a true reporter they would tell the reader that this problem was fixed under the last administration. The problem is the State of Michigan requires the utility to cover the base load of the state whether or not the utility is acually selling that much capacity in the state. We had this deregulation back during the Engler administration if you remember. At the time the state electric consumption was was going up and the thought of new power plants were being proposed. The power companies were putting up a fuss because they were being forced to provide the base capacity while out of state suppliers did not have to provide base capacity. This HB 5184 is the result of stupid part time legislators that weren't paying attention while living here. And shame on Bridge Magazine for also not paying attention.
Mike
Fri, 04/04/2014 - 2:42pm
Well Mike, other than you stating the bill number correctly, just about everything else you said was wrong or misleading. The open markets we enjoyed thru most of the 2000's resulted in very competitive rates AND build of capacity ( though not abundant ). The utilities never liked it and seized the opportunity to close off the markets when Granholm crammed down the RPS legislation. Quid pro quo. Based on your comments it's also clear you have not taken the time to read and understand 5184. It addresses virtually all your and utility stated concerns. But some would still prefer government be in control if how we manage our use and cost of energy. Ignoring how technology and regionalization are providing freedom and options never available before.
Mike Svendsen
Mon, 04/14/2014 - 6:58pm
Mike, You were right I had not read the bill, so I did do some homework. I looked at our surronunding states electric rates and the natural gas open market here in Michigan. This bill will not change the distribution costs at all and my make them go up as it seems electric rights of way are not being maintained as they should . The way this does work is for the large customers that get their service on transmission lines that are not owned by the utilities. Yes this does relieve instate utilities from base load requirements , it does not require any generator to make a commitment for longer than a year. And force the company that owns the meter to buy the the of site vendors receivables(another layer of stupidity). You get what you pay for , let's do this. Still government supervised hogwash.
Sun, 04/06/2014 - 10:04am
In the interest of transparency: who are the members of Truth Squad; what is their educational background and work experience; what is their political affiliation; are they compensated for their work; and who decides which ads to evaluate?
Carolyn
Sun, 04/06/2014 - 5:39pm
Thanks for asking the question. There are many many of us wanting to know the same information. Bridge - please provide
david zeman
Mon, 04/14/2014 - 1:49pm
Hi Rich and Carolyn, So sorry for the late reply to your question about the authors behind the Michigan Truth Squad. The TS reporting and writing load is shared among Bridge's full-time staff writers and experienced freelancers across the state. We are writing maybe one or two a month right now but the volume will intensify significantly by early fall and through the election season. We have a diverse staff of writers, though we don't ask or know folks' political identification. Obviously, we are all human beings and I'm sure have our own biases in our personal politics, just like any socially aware adults. However, we don't evaluate political ads for the effectiveness or political perspective of the ads. We evaluate them solely by whether their statements are factually based. So the ideology of any particular ad is not on our radar, nor is the like-ability of any particular ad, or whether any of us agree with it. We simply evaluate the underlying facts and whether they are accurately and fairly presented. In terms of how we chose the ads, we can't keep up with all of them and we often rely upon items that are sent by alert readers urging us to check them out. They might be print, online or broadcast ads. They might be tweets or position papers or robo-calls by candidates or groups supporting or opposing particular candidates. We tend to focus more on state (vs. federal) political campaigns in Michigan, and we very much try to give equal play to different political parties and races in terms of the content we scrutinize. All Truth Squads are closely edited by Bridge editors and other staffers, same as any other reported story for Bridge. We understand that Michigan residents are looking for nonpartisan and trusted resources for evaluating the credibility of political ads and we work hard to fulfill that mission. Please let me know if you have any questions, concerns, criticisms or suggestions for improving the Michigan Truth Squad. We take great pride in our work, but we also take pride in seizing on opportunities to improve. Best, David Zeman Bridge Editor dzeman@bridgemi.com