Michigan Governor to address energy choice; backers, opponents keep up debate

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The Michigan debate on energy choice continues as Governor Rick Snyder prepares for his annual energy speech which he plans to include comments on the topic of energy choice.

Crain’s Detroit Business
Written by Jay Greene

In December, Gov. Rick Snyder is scheduled to give his annual energy speech in which he is expected to address the highly charged energy choice issue. He has said his policy recommendations will be based on reliability, pricing and a protected environment.

Last year, Snyder ordered the Michigan Public Service Commission and Michigan Energy Office to conduct hearings and issue reports in four areas: customer choice, renewable energy, efficiency and other areas, including the reasons why Michigan has higher rates than other states.

Besides potentially taking a position on customer choice, Snyder is expected to issue recommendations on whether to increase the state’s renewable energy standards beyond the current 10 percent of power generation and whether to continue or increase the state’s successful gas and electricity efficiency targets.

John Quackenbush, chairman of the Public Service Commission, said the commission’s draft report last month on energy choice was carefully worded to “fairly present the areas where there is a difference of opinion.” A final report on energy choice is due Wednesday.

“We received many comments” on the choice report “and tried to just lay the facts out” without offering recommendations on what to do about the 10 percent when it expires in late 2015, said Quackenbush. “We will get recommendations (for legislation) from the governor.”

The report issued this interesting tidbit: If the 10,000 mostly business customers in line were allowed to choose an alternative electricity provider, “choice participation would be approximately 25 percent for Consumers and 21 percent for DTE.”

Moving the cap?

The 5-year-old cap on the number of business customers that can purchase lower-priced electricity from the state’s 24 licensed alternative electric providers has provoked ongoing debate.

Opponents of eliminating or increasing the 10 percent customer choice cap, which include DTE Energy Co.and Consumers Energy Co., say moving to a competitive or deregulated market could reduce capital investments needed to expand generation capacity or delay improvements to aging distribution infrastructure. The reason: fewer customers to support the investments needed.

Increasing the cap could also worsen service reliability as investors shy away, said Steve Transeth, policy director for Michigan Jobs & Energy Coalition, which represents the utility companies and supports the current regulatory scheme.

On the other hand, supporters of increasing or eliminating the cap in Michigan’s hybrid energy market — one in which 90 percent is regulated and 10 percent is open for competition — contend full deregulation would force utilities to reduce rates to keep customers and market share.

Moving to full competition in the energy market would save businesses money and lead to higher job growth, said Wayne Kuipers, executive director of Energy Choice Now, a coalition of consumers, businesses and alternative energy suppliers.

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