Questions and Answers
How has competition and choice worked in Michigan?
What has happened to electric rates since we took away the Detroit Edison/Consumers Energy monopoly?
What has happened to reliability since we took away the monopoly?
Does Michigan face an energy shortage?
Who is interested in building new baseload plants in Michigan?
How are utilities saying we should address coming power shortages?
What does the CCC think we should do to address power needs?
Why are the utilities pushing to kill competition now?
Isn't it vital to have only the two major utilities build new plants to ensure reliability?
What would Rep. Accavitti's bills do?
Who is supporting Rep. Accavitti's plan?
Who is opposing Rep. Accavitti's plan?
What can I do?
How has competition and choice worked in Michigan?
Michigan has seen lower rate increases and a major boost in reliability since passage of Public Act 141 of 2000, which gave Michigan electric customers the opportunity to choose their supplier. In 2000, electricity cost about 0.8 cents per kilowatt hour more in Michigan than surrounding states; today that margin is down to 0.3 cents.
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What has happened to electric rates since we took away the
Detroit Edison/Consumers Energy monopoly?
Our rates are up by less than surrounding states. According to data released this spring by the Michigan Public Service Commission, Michigan 's industrial and commercial rates have increased by less than any other state in the Midwest, and residential rates increased at about the regional average. (Click here for rate comparisons) The state with the highest increases across the board was Wisconsin , which is the most regulated state. In fact, that's the state Consumers Energy and Detroit Edison want Michigan to emulate.
Back to top What has happened to reliability since we took away the monopoly?
Free to come in and build plants, independent power suppliers have built about 4,000 megawatts of new power. That has been critical to keeping the lights and air conditioners running during the summer. Detroit Edison and Consumers refused to build prior to 2000, leaving our state chronically short of power during peaks. We've had no problem meeting needs since opening Michigan up to choice.
Back to top Does Michigan face an energy shortage?
In the short run, no. In the longer run, it is difficult to tell whether we face a shortage and how serious it might be. Just two years ago, the Michigan Public Service Commission said we should plan for a two percent increase in energy needs annually. In 2007, that was downgraded to one percent. The U.S. Energy Information Agency says energy needs in the Midwest will grow even less. In fact, demand for electricity in DTE's territory this decade has increased by less than one percent.
While it is important for Michigan to be able to meet future energy needs, there are many ways to do so and many companies ready to step in under Michigan 's current regulatory plan. Renewable power, new coal-fired plants, new nuclear plants, additional transmission capacity and increased energy efficiency -- all potential suppliers of all of these possible solutions compete to decide how to meet our state's future energy needs.
Back to top Who is interested in building new baseload plants in Michigan ?
At least three major companies are moving forward to build new plants in Michigan.
(Click here for an outline of current and proposed projects)
- Wolverine Power Cooperative is planning to build a coal-fired plant of 300 to 1000 megawatts near Rogers City , and has applied for an air quality permit.
- LS Power is planning to build a 750 megawatt coal-fired plant near Midland , and has applied for an air quality permit.
- M&M Energy is planning to build a 500 megawatt coal gasification plant in Alma .
None of these companies is asking for any profit guarantees from state government.
In addition, Consumers Energy has announced plans to build a 500 to 750 megawatt coal plant near Bay City. However, the company says that it will not build the plant if it faces any competition.
Back to top How are utilities saying we should address coming power shortages?
They have told lawmakers and Wall Street they will not build any new plants unless they are guaranteed a monopoly. They want the exclusive right to build new plants, and a guarantee that they will lose no customers – or if a customer leaves, that the customer will continue to have to pay them for the plant they are no longer using.
Back to top What does CCC think we should do to address power needs?
Competition has worked well in Michigan – let's take the next step toward increasing competition. CCC is backing Senate Bills 426-428 and House Bill 4630, (read the CCC bill summary; read SB 426, SB 427, SB 428 or HB 4630) which would:
- Wolverine Power Cooperative is planning to build a coal-fired plant of 300 to 1000 megawatts near Rogers City , and has applied for an air quality permit.
- Increase the ability of residential customers to choose suppliers. Right now, cumbersome state regulations make it hard for alternative electric suppliers to meet residential customer needs. Our plan would fix that and make it as easy to change electric suppliers as it is to change natural gas suppliers.
- Open the door to more renewable power. Our plan calls for Michigan to adopt a strong renewable portfolio standard and encourage renewable power as long as it cost about the same as power from a new coal-fired plant. We believe this will open the market to renewables while protecting customers from high cost power.
Back to top Why are the utilities pushing to kill competition now?
In the months ahead, according to filings they have made with the Michigan Public Service Commission, the utilities plan to raise residential rates dramatically. If they do so, it will open the door to increased residential competition. The utilities want to take away the ability of residential customers to choose alternative suppliers, then raise rates on their captive audience.
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Isn't it vital to have only the two major utilities build new plants to ensure reliability?
Not at all. Today neither Consumers Energy nor Detroit Edison is in charge of reliability. The Midwest Independent System Operator is charged with ensuring power gets delivered all across the state and across the Midwest . It seeks to provide reliability using the lowest cost power available. In fact, if Detroit Edison or Consumers builds a major new plant and it is not cost competitive, it will not be used. However, if the utilities get their way, Michigan customers will still be forced to pay them for that plant.
Back to top What would Rep. Accavitti's bills do?
- Kill competition. By requiring customers to decide now whether they want to ever change electric companies, Rep. Accavitti's plan would essentially repeal the choice laws passed in 2000. It would be like forcing grocery customers to choose only one grocery and never be allowed to step foot into a competitor facility, locking in profits for the company.
- Raises residential rates: Requires MPSC to set utility rates on a cost of service basis previously disapproved by the MPSC. Would raise residential rates more than $350 million.
- Provide for “file and use” rates. After competition is killed the bill would allow the utilities to automatically raise rates whenever they want. The Michigan Public Service Commission could only stop rate increases after a lengthy hearing – during which time the utilities could already have raised rates again.
- Create Certificate of Need process. Says only utilities could ask the Michigan Public Service Commission to own or operate new power plants. Any cost overruns would be automatically passed onto customers if evidence is merely presented to justify the increase. Utilities could start charging customers years before a plant is completed, shifting all risk of cost overruns to customers and away from shareholders and management.
- Provide for power plant sales. Allows utilities to sell their existing power plants and restricts MPSC disapproval to cases where a material adverse effect on the utility is found.
Read SB 426, SB 427, SB 428 or HB 4630
Back to top Who is supporting Rep. Accavitti's plan?
- The two major utilities.
- Their employees.
- Their shareholders.
- Their major suppliers.
Back to top Who is opposing Rep. Accavitti's plan?
- The Customer Choice Coalition.
- Large energy users, who are represented by the Association of Businesses Advocating Tariff Equity.
- Residential customers, represented by AARP.
- Environmental groups.
- Renewable energy providers.
- Independent Power Producers
- Michigan 's schools, who have cut costs dramatically by being able to shop.
- Small businesses, including the Small Business Association of Michigan.
- Many others.
Back to top What can I do?
Click here to learn more about how you can help ensure we have a competitive electric market that will allow customers to choose lower-rate providers.
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