Energy in Michigan may become regulated once again

Soon the state of Michigan may no longer be home to a deregulated energy market.

A new eight-bill proposal put forth by House Energy Policy Chair Aric Nesbitt will require Michigan citizens to buy their energy within the state - a market critics say has been monopolized by two providers - finally doing away with a 15-year-old state energy plan.

The Customer Choice and Electricity Reliability Act  - set in motion by former Gov. John Engler back in 2000 - put in place several codes of conduct under which utility providers must adhere. Additionally, a related measure eight years later opened up Michigan's energy market to other kinds of generators, allowing ratepayers to use their service providers' energy transmission technology to be tempered with up to 10 percent alternative generation or out-of-state competitors.

Michigan's new energy profile
According to Michigan Capitol Confidential, Nesbitt claims this isn't an instance of re-regulation, because Customer Choice was never a textbook example of deregulation. However, opponents are certain that this move will lead to runaway energy prices in the wake of zero competition. Energy Choice Now Executive Director Wayne Kuipers noted the instated programs has saved Michigan more than $1 billion.

Others see this action as sweeping away the last remnants of a popular and effective program, but Michigan's Department of Licensing and Regulatory Affairs spelled out an overarching reason behind the legislation. The Michigan Public Service Commission sought to establish itself as the single authority over the restructuring of the state's utility infrastructure and operations.

A Supreme Court decision a year earlier had denied the commission the ability to implement a trial version of the Customer Choice model of energy supply - known as "retail wheeling" - citing the organization lacked the power to do so. The decision was ultimately repealed. With the passage of this new set of bills, however, the power bestowed long ago to the MPSC could be threatened.

Michigan ratepayers could lose the right to control how their energy is generated.

A priority to monopoly
As an effect of this proposed legislation, the two dominant utilities in Michigan - Detroit Edison and Consumers Energy - have been handed the keys to a unquestionable monopoly, in more ways than one.

Though Nesbitt plans to keep the alternative energy portion of Customer Choice, that would be beneficial to the two energy giants who stand to gain the most. Better to cap the market for every other competitor at 10 percent than allow an open market to dictate which businesses dominate energy in Michigan.

This content is property of ESCO Advisors and all reproductions must reference and link back to the ESCO Advisors website.