Michiganians need electricity choice

Kathy Hoekstra

Michigan’s Senate Energy and Technology Committee managed to kick energy overhaul legislation to the full Senate just before the Memorial Day weekend. Now, it appears backers of Senate bills 437 and 438 would like to finish the job before the annual Detroit Regional Chamber Conference on Mackinac Island.

Sandwiching the votes between busy calendar items may signal uncertainty that there are enough votes for passage.

One reason for that uncertainty may stem from widespread opposition to a part of SB 437 that would phase-out the state’s 10 percent electricity choice market. That is, the 10 percent of Michigan’s electricity for sale from alternative energy suppliers other than DTE and Consumers Energy.

These two utility giants have controlled 90 percent of Michigan’s retail electricity market since 2008, and they’ve spent the better part of two years promising shareholders they’d get the rest through legislation—specifically, bills sponsored solely by Sen. Mike Nofs (R-Battle Creek) and Rep. Aric Nesbitt (R-Lawton), the chairs of the energy policy committees in the two legislative chambers.

No wonder the utilities want the entire market. Despite their 90 percent stranglehold on the market since 2009, 60 million MWh have been sold under electric choice. At a savings of 1 to 2 cents per kWh, that’s $1 billion saved since 2009 alone, and $2 billion since 2001 (under a period of total deregulation from 2001 to 2008).

It is bad enough that six members of the Senate Energy and Technology Committee have shown a complete disregard for the hundreds of public schools, community colleges, public universities, churches, hospitals, and even local units of government that smartly used the open retail market to save money.

It is worse when considering the biggest chunk of the the 6,140 electricity choice customers are in businesses that employ thousands of Michiganders. And worse still that many of these employers are located in the districts represented by a lot of these same senators.

Maybe the ennui over massive utility savings is the result of term-limits for 27 of the state’s 38 senators, who cannot run again in 2018. Sen. Nofs himself is on the way out. So perhaps it’s not that big a deal he spearheaded bills opposed by Kellogg’s, one of his district’s largest employers and choice market participant.

The Battle Creek cereal company told committee members that the ability to shop around on the open market saves millions of dollars a year. With some 2,500 employees in Michigan alone, the company is concerned that the law, if passed, would potentially impact jobs and “make Michigan less competitive.”

But what of the 10 senators who can run again in 2018?

Energy committee member Sen. Ken Horn (R-Frankenmuth), for instance, has long been a proponent of a fully regulated retail electricity market. This despite protests by the Frankenmuth Bavarian Inn Lodge, Zehnder’s and Bronner’s Christmas Wonderland. Electricity costs the latter an average $1,250.00 per day to keep all those Christmas lights on, and that’s with savings due to retail open access. A COO of one of these companies says Horn remains unmoved on “the economic impact of choice on business and our ability to use these funds to pay our staff more or create other economic impacts.”

Michigan’s national reputation as the “comeback state” came about through pro-market policies such as right to work and elimination of the Michigan Single Business Tax. SB 437 could undo some of this progress as it shows Michigan is not as serious about creating a business-friendly environment.

Especially since 2009, Michigan ratepayers have paid $10.5 billion more than our neighbors in fully deregulated Illinois who pay market rates for the same amount of electricity.

Term-limited lawmakers who care about their legacy may want to think twice before doing the utility companies’ bidding by voting yes on SB 437.

The state’s 2018 office-seekers might be more careful. A yes vote not only gives opponents campaign fodder, but shows the 11,000 customers waiting for a shot at retail open access that they mean less than utility companies and their shareholders.

Kathy Hoekstra is a communications manager for a business advocacy organization.