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|Who||Citizens for Energizing Michigan’s Economy|
|What||“California” television ad|
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 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.