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Report Criticizes MI Law Limiting Energy Choice

February 10, 2015 By Josh Kessler

On February 5, the COMPETE Coalition published a blog entry that criticized in Michigan’s cap on its competitive electricity market for severely hampering customer choice and triggering higher electricity prices. In 2008, the state established a 10 percent cap on the percentage of electricity sales that can come from competitive suppliers within each utility’s service territory, as explained in the Public Service Commission’s recent report on the Status of Electric Competition in Michigan.

Retail Customers in Waiting

At the two largest utilities, Consumers Energy and DTE Electric, customers have exceeded the 10 percent cap for each of the past three years, with many more waiting in the queue. Without the cap, in 2014, consumers would have seen participation of nearly 28 percent and DTE would have seen 22 percent – a total of about 11,000 customers between the two companies. Three of the five smaller utilities are also above or within a fraction of a percent of the cap.

Price Benchmarking

Comparing electricity rates in Michigan and five neighboring states now vs. 2008:

  • Residential rates ranked third out of six in 2008. Since then, Michigan has surpassed Wisconsin and Illinois to take first place, and the uptick appears to have begun that year. Illinois, in contrast, has seen prices fall since 2008.
  • Commercial rates were comparable to those in Wisconsin and Minnesota and above those in Ohio and Indiana; Illinois saw a major spike in 2008 before dropping back down the following year and remaining below the other states since 2011.
  • Industrial rates have been at or near the highest of the six states since 2008, though this follows a long-term trend that existed through the study period (2000 to 2014).

Midwest Electricity Prices (Com) Midwest Electricity Prices (Ind) Midwest Electricity Prices (Res)

PSC Recommendations

Although the Commission’s status report did not recommend any specific legislative action, it highlighted concerns about the lack of planning to meet long-term power needs. Several power plants are scheduled for retirement and the Midwest System Operator has projected a capacity shortfall.

The PSC also recommended addressing reliability concerns in the Upper Peninsula related to provisions from Public Act 286. PA 286 is the legislation that established the 10 percent cap. It also sought to introduce a comprehensive energy policy framework, reducing emissions from fossil-based infrastructure (especially coal) through investments in efficiency and renewables.

About COMPETE

The COMPETE Coalition is composed of stakeholders who support the development of well-structured competitive electricity markets. Its members include energy customers, suppliers, generators, transmission owners, trade associations, technology innovators, environmental organizations, and economic development corporations.

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