DTE: Our work in Ohio doesn’t make us hypocrites
Re: Kathy Hoekstra’s June 16 post on The Politics Blog, “DTE embraces electric choice in Ohio, not Michigan”: Kathy Hoekstra is wrong in arguing that DTE Energy is participating in the deregulated retail energy market in Ohio.
First, let’s get the facts straight. Wholesale power markets and retail energy marketing are two separate business models. Wholesale power markets operate in all regions of the United States and provide a way for utilities to manage supplies for electric customers. The deregulated retail market allows some customers to buy power from third party marketers. In Michigan, these marketers have relied on excess electric capacity, which is quickly disappearing.
It’s true that DTE Energy Trading, a wholly separate business from DTE Electric in Michigan, recently won a contract to supply wholesale electric power to AEP Ohio. This wholesale contract represents 17 percent of the power AEP Ohio needs to serve the customers for which it is responsible. Not one kilowatt will be used in the retail market.
Second, Hoekstra would have you believe that this contract takes power from DTE Electric’s customers in Michigan. This simply is not true. This implication goes against how the electric power markets and independent system operators (ISO) actually work. In DTE Energy Trading’s wholesale contract with AEP Ohio, all the power is sourced from generators in the PJM ISO market, not the market in which Michigan operates.
Hoekstra distracts from Michigan's impending power capacity shortfall and the fact that no one is planning for the long-term electric needs of Michigan’s retail energy market customers. That retail market comprises 10 percent of the state’s electric usage. As plants retire due to old age and federal regulations, the excess capacity these marketers have relied on is simply disappearing, while their energy needs of their customers are not.
The Midcontinent Independent System Operator (MISO) projects that Michigan’s Lower Peninsula is facing a 1,200 megawatt capacity shortfall as soon as next summer. The shortfall will grow over the next decade as Michigan will be forced to retire 60 percent of its coal-fired generation, representing 30 percent of its total generation, due to new federal environmental regulations. MISO warns that a capacity shortfall could lead to conditions that could destabilize the grid and result in power interruptions.
Under responsible electric regulation, all energy providers in Michigan would develop verifiable plans to meet the electric needs for all the state’s families and businesses. Regulation also has proven to be the best way to provide customers with stable, affordable rates. The fact remains — rates in deregulated states are on average 25 percent higher than rates in regulated states, and there has never been a year in which overall rates in deregulated states have been lower than those in the regulated states.
Some states deregulated their electric markets in the late ’90s and early 2000s in an effort to lower rates. The results of the policy have been far from ideal, forcing many states to implement new regulations to protect reliability.
Michigan should be looking ahead to an energy future that ensures reliable, affordable and clean energy for its families and business, and resist the temptation to return to the failed deregulation experiments of earlier decades.
president and chief operating officer,