Measure Could Dwindle Electricity Choices in Wolverine State

Only two of 10 active alternative-energy suppliers in Michigan – Wolverine Power Marketing Cooperative and CMS Energy Resource Management (ERM) MI – could qualify to serve electricity customers in the state’s 10 percent retail choice program under legislation (Senate Bill 437) sponsored by State Senator Mike Nofs (R-Battle Creek).

At issue, according to Crain’s Detroit Business, are provisions in the bill that would require the suppliers to “own or have under contractual rights” over at least 90 percent of the electric capacity within Michigan to meet peak demand in the competitive market by October 1, 2018, and every year thereafter.

Spokespersons for several other alternative-energy suppliers told Crain’s that they could be forced to shut down their Wolverine State operations by 2018, if Nofs’ bill is passed this year and signed into law by Governor Rick Snyder (R). If they do, thousands of energy choice customers, including 200 school districts, could see electricity costs rise as they lose access to lower-cost, competitively priced electricity.

Electric Choice was first introduced in Michigan by Public Act 141 in 2000. One goal of the measure was to have competition within the electric industry by offering Michigan customers the opportunity to purchase electric generation services from their incumbent utility or an alternative electric supplier (AES). Public Act 141 was later amended by Public Act 286 of 2008, placing a limit on electric choice.

The current electric choice law allows customers to purchase competitively priced electricity from alternative energy suppliers. That market is capped at 10 percent of electric sales.

  • That choice market now has 6,140 customers using 1,964 megawatts of power, mostly large businesses such as Dow Corning and U.S. Steel, as well as about 200 school districts.
  • The 10 percent cap means more than 11,000 customers, mostly businesses, are on a waiting list to get into the choice program. If those customers were allowed to buy power in the choice program, they would account for about 25 percent of electric sales in the state.

An earlier version of the bill was approved 6-1 by the Senate Energy and Technology Committee. Since that approval on May 31, Nofs has altered the bill twice to gain support. In fact, sources told Crain that the latest version is undergoing another revision while the legislature remains in recess through September.

Nofs’ spokesman Greg Moore confirmed to Crain’s: “We are in the process of re-working several items (including the electricity choice section) and therefore don’t want dated information being put out for discussion. It would also be premature to get into specifics before we’ve had a chance to fully brief members and stakeholders.”

In previous interviews, Nofs has argued that SB 437 does not kill the customer choice program, which was approved as part of a comprehensive 2008 energy package.

“Nofs is correct that his bill doesn’t kill choice. Wink wink. He is right. It doesn’t kill the 10 percent, it only kills the 10 percent for non-Michigan utility alternative-energy suppliers,” said an energy expert with ties to alternative-energy suppliers who spoke to Crain’s on condition of anonymity. “Wolverine and CMS do fine. They want to be able to grow the choice load. They don’t care if Constellation (or other alternative-energy companies) go… out of business” in Michigan.

Bob Strong, general counsel with the Association of Businesses Advocating Tariff Equity (ABATE Energy), which represents major industrial customers in Michigan, said Wolverine and CMS ERM could qualify under current business practices to be the only surviving AES companies in Michigan.

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