Editorial: Room for compromise on electric choice

The Detroit News

Dozens of Michigan’s coal plants are going offline, and the state’s ability to generate electricity for at least a million residents hangs in the balance. Utilities project a 1.8 gigawatt production shortfall by 2020, and there are myriad questions about if and how the federal Clean Power Plan might be enforced. That will require the state to make its own plan for a clean, efficient energy supply.

These are big issues for Michigan residents, schools and businesses. The Legislature has been working to address them for some time. Now, with a solid framework in place, it must focus on electric choice and work quickly toward a compromise.

A diverse coalition of conservative, liberal, environmental and business groups has formed in opposition to Senate bills 437 and 438, which would overhaul Michigan’s energy policy.

They disagree on different parts of the legislation. Environmental groups don’t like that it takes away the current mandate that 10 percent of the state’s generation come from renewable sources. But that would be replaced with a goal of 35 percent generation from a combination of renewables and conservation efforts.

Conservative groups, business groups and school districts oppose the legislation over its more contentious electric choice requirements. Their concerns deserve consideration.

The new legislation would maintain the state’s current 10 percent cap on those who can purchase electricity from an alternate supplier other than DTE Energy and Consumers Energy, both of which support the new energy package, at reduced rates. There are roughly 6,000 customers in the capped choice program, with another 11,000 waiting in line.

These opponents argue the new legislation will essentially kill electric choice because it would keep the cap and impose a new electric generation service charge on customers who move into the choice market.

Other new requirements are that alternate suppliers would have to prove they can provide enough energy to meet their customers’ demands for three years. Switching back and forth between suppliers would also become much more difficult.

Those provisions are necessary. Utility companies bear the fixed costs of customers switching, as well as depending on their generation as backup. Requiring alternate suppliers to ensure capacity is a fair proposal.

There is room, however, to compromise on the service charge and the cap for who can move into electric choice. If alternate providers prove their capacity, the service charge seems unnecessary because they’ve become as reliable as a major utility.

It’s understandable the state’s largest utility companies want to ensure their customer base, but that shouldn’t trump broader consumer choice, especially considering Michigan has remained among the 13 most expensive states in the nation for residents to buy electricity since 2000.

School districts — and the taxpayers that fund them — have saved $100 million in energy costs since 2000, and several large Michigan employers, such as Dow Corning, U.S. Steel Corp. and Amway, also point to increased costs if the legislation passes, as well as concerns over a more regulated market.

These are important constituents with reasonable concerns over what are very likely higher electricity rates in the future.

The Legislature can ensure energy and electricity reliability, while allowing a greater number of residents to enjoy electric choice with the new, firm capacity requirements.