New Push in Michigan to Lower Electricity Rates

Michigan legislators are once again attempting to remove the 2008 competition caps that allow only 10 percent of the electricity load to shop for cheaper rates.

In 2010, a Michigan legislator, Rep. Tom McMillian, attempted to end the competition caps on electricity shopping, but the legislation died after a committee hearing. This spring, Rep. Mike Shirkey introduced another bill, HB 5503, to allow consumers to escape rising electricity rates.

Shirkey’s legislation, unlike the previous bills, would implement a process where the Michigan Public Service Commission would be able to raise the cap once electricity demand reaches “trigger points”. The cap would rise slowly, up to six percent each time a trigger point is reached through 2015.

HB 5503 is being opposed by those who believe a competitive market will result in higher electricity rates. Opponents include the chairman of the House Energy and Technology Committee, Rep. Kenneth Horn, and Community Energy, the utility serving the majority of the state’s demand.

Rep. Horn argues competition will increase rates, but this is unlikely given the experience of other competitive states and the increase in electricity rates experienced by Michiganites over the last three years. Since 2008, Michigan electricity costs have risen 11.93 percent, compared to the national average increase of 3.97 percent.

The evidence has convinced the Michigan business community, which is arguing more competition will lead to cheaper electricity and more manufacturing jobs.  The owners of MTS Seating estimate the company could save $150,000 annually if able to choose an alternative electric supplier.

There’s no question the demand for more competition exists. In the Consumer’s Energy territory about 4,855 customers are on the waiting list for competitive electricity. Detroit Edison (DTE), the state’s other major utility, contains 3,762 consumers waiting to exercise their freedom to choose.

It’s clear the capped competition policy is not saving consumers money. Residential customers were promised rates would increase by only 2.5 percent a year. Instead, electric rates for Consumers and DTE customers have jumped by 20 percent.

Shirkey’s new competitive process bill can help Michigan retain and attract jobs. In a state hit especially hard by the recession any policy that increases the state’s competitive edge should be a no brainer.

Written by The Electricity Guru

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