Rep. Nesbitt: Energy for the 21st century
Michigan’s energy future is at a crossroads. With burdensome federal mandates that could dictate our energy decisions, Michigan families and job creators need a state policy that creates reliable, affordable energy.
As chair of the House Energy Committee, I have studied many policies and proposals throughout the country, which has resulted in a legislative proposal I recently introduced to put our state in the best position to produce the energy we need for the 21stcentury. This proposal would focus on lower rates for customers and new investment in energy generation, while eliminating unnecessary fees and costly cookie-cutter renewable mandates.
Specifically, the issue of electric generation will be one that will require serious action in the near future. With several coal-fired power plants scheduled to be shuttered by 2016, largely due to burdensome EPA regulations, it is important that we find a way to ensure that Michigan residents are not left in the dark.
Unfortunately, Michigan’s current electric market does not provide the certainty to ensure we have the electric generation necessary to power our homes and businesses in the future.
Currently, Michigan operates under a “hybrid” system for purchasing electricity, where 10 percent of industrial and retail customers can choose to purchase power from a small, alternative electric provider, rather than a normal utility like DTE Energy or Consumers Energy.
It is essentially an artificial market created for a select few within a regulated industry. The result is that 90 percent of Michigan ratepayers are on the hook for all the fixed costs of maintaining a reliable electric system, subsidizing the 10 percent who receive a special carve out. In addition to being unfair, it also creates uncertainty for all of us.
Certainty is crucial for producing affordable, stable electric rates. The range of prices are usually related to the certainty, or lack thereof, when it comes to building new, reliable generation plants. New plants (natural gas, nuclear, etc.) can cost up to $1 billion, requiring large amounts of capital and certainty of return. DTE and Consumers are required to be able to produce 15 percent more than our expected peak usage, which means the only way to have certainty is to operate in a regulated market.
As a Hillsdale College graduate and free market advocate, I was surprised to discover that the electric prices of fully regulated states are, on average, 25 percent cheaper than those in deregulated states. In fact, states with regulated markets like Indiana, Iowa, and Missouri offer the lowest electric rates in the Midwest. It has become clear that without certainty, there tends to be a lack of investment, higher rates, and the possibility of not having the generation required to operate our homes and businesses.
Michigan families demand a state energy plan that makes sense. It is important that we secure our energy future by moving away from a policy of special-interest carve outs and towards a policy of affordable, reliable electricity.
State Rep. Aric Nesbitt, R-Lawton, is the Majority Floor Leader and is serving his second term as committee chair for House Energy Policy.