Editorial: Don't flip switch on electric choice
A bill currently under consideration in the state House would eliminate the ability for some customers to choose an alternate electricity provider in Michigan. Since 2008, 10 percent of a utility's customers have had the ability to switch to an alternate provider. And they should keep that choice, within a stable framework.
Though electric choice poses challenges, it's important in principle that consumers can purchase service outside of a monopoly. At the same time, electricity generation has unique needs, with predictability and capacity constantly changing.
Any new legislation must marry these two forces.
It should allow choice, but also contain guidelines that govern how those who buy from alternate providers interact with the overall grid, and how much notice they must give to Michigan's two main providers if they intend to come back online.
Those guidelines are even more critical as the state looks to replace the generation currently provided by nine coal-fired power plants set to retire over the next two years.
Electricity competition has been beneficial for Michigan customers. Kalamazoo Public Schools has saved more than $1 million buying from an alternate provider. Statewide, more than 100 billion kilowatt-hours have been supplied under competitive electric choice rates, saving customers more than $1 billion.
Those savings are important, especially considering Michigan's relatively high electricity rates compared to other Midwest states.
There are currently more than 11,000 customers in the state waiting to use alternate providers, according to the Michigan Public Service Commission. That's about 25 percent of the market, and up from the 3 to 20 percent of customers who were interested in outside providers before 2008.
Provided they follow strict guidelines that protect Michigan's infrastructure and capacity, those customers should have the choice to use alternative companies. Gov. Rick Snyder has proposed keeping electric choice but requiring alternative suppliers to prove they have the capacity to serve customers for five years.
That's a solid compromise. Customers who choose alternate providers must also give ample warning if they intend to switch back to main providers. Switching hastily can overload the system, and that is unfair to the millions of other customers who rely on those companies.
The state's two main providers, Consumers Energy and DTE Energy, are understandably hesitant to invest billions of dollars in new plants in a climate of unpredictable demand. And under Michigan's hybrid system, they will continue to shoulder the fixed costs to maintain infrastructure for consumers who aren't purchasing electricity from them.
Electric choice with strong guidelines to protect both customers and the utility companies remains the best option for Michigan.