Don’t rush into bad energy policy

Mike Shirkey

There continues to be a lot of pressure on the Michigan legislature to pass Senate Bill 437, legislation that would dramatically and negatively impact customers’ rights to choose their electric supplier, and likely, their rates.

The bill, a comprehensive reform of Michigan’s energy policy, is claimed to address improved reliability, would result in the elimination of electric choice, and most likely lead to dramatically higher electric rates — all without any requirement to build even one new megawatt of generation.

The strongest proponents for passage of SB 437 are Michigan’s two largest utilities. They, and others, are pointing to two recent developments as signs that lawmakers should act immediately, when in reality, both of their new data points are actually powerful arguments against rushing into a bad solution with billion dollar consequences.

First, the utilities are holding up a recent decision by MISO, the region’s independent electric grid operator, to delay until November the filing of a new three year forward market auction proposal. This action is a key part of MISO’s long term strategy to ensure resource adequacy in Michigan.

What’s the MISO proposal mean in plain English? MISO is proposing a competitive auction to set a price and arrange for adequate power supply three years into the future. This long term planning will give owners of existing power plants and builders of new power plants market signals to make investment decisions and will also provide Michigan consumers and electric suppliers with price certainty three years ahead.

MISO is dealing with complex issues and is moving forward carefully and purposefully with consumers in mind, while launching a process for long term reliability in Michigan. MISO’s approach seeks to add new generation, when data and market signals indicate the need, while using the pressure of competition to keep costs down. The delay is prudent and warranted.

When the debate on SB 437 began, DTE and Consumers advocated to include in the legislation onerous requirements on their competitors by forcing them to buy power three years ahead. MISO’s auction process would meet that goal, without the red tape and regulation, or imposing hundreds of millions of dollars in new electric costs on our local schools, job makers, and families.

The utilities are also holding up a letter sent to MISO this month by Michigan Agency for Energy Executive Director Valerie Brader and Public Service Commission Chairperson Sally Talberg, that asks the operator to conduct a reliability study to see what might happen if two nuclear energy facilities went offline at the same time on the same day.

Brader, Talberg and their agencies deserve credit for using the tools they have, and looking ahead to prepare for every eventuality. But to hold up their letter as an argument in support of the massive new costs and regulations in SB 437 is questionable in purpose.

Earlier this summer our Michigan Public Service Commission issued an order stating that they don’t anticipate any local reliability problems in Michigan “in the foreseeable future.” Michigan ratepayers shouldn’t be asked to forfeit the free market and spend hundreds of millions of dollars on an insurance policy that only covers, at best, a few hours of electricity on some future date when disaster may strike. We don’t need to add more unnecessary costs.

Michigan ratepayers have already endured enough.

Since 2008, when Michigan capped electric competition at 10 percent, the state’s electric rates have skyrocketed. Residential rates in Michigan are up over 42 percent since 2008. Overall, our rates are up more than twice the national average.

Meanwhile, our neighbors in Illinois, where customers get to choose their electric provider, have seen overall rates go down .5 percent since 2008.

Senate Bill 437 deserves full and robust debate. There are elements of the comprehensive bill very worthy of support. But the portions of the bill, as it currently stands, that will kill choice and exacerbate Michigan’s uncompetitive rates are not quite ready for prime time.

Michigan should rely upon the experts who have the financial and professional resources and are charged with ensuring reliability throughout the entire region, to establish the necessary systems and market signals to drive timely and competitive investments. This will protect our utilities and consumers. Both deserve equal consideration and representation.

Sen. Mike Shirkey, R-Clark Lake, represents Michigan’s 16th State Senate District.