A raise in the deregulation cap... would be economically disastrous for Michigan. It would unfairly raise the burden on families and businesses, who would be forced to shoulder the hundreds of millions of dollars in fixed costs left behind. - Detroit Regional Chamber
Deregulation has not led to lower rates in deregulated states as seen in the figure below. Rates in states that deregulated were higher before deregulation driven by structural and geographic reasons. They remained higher after deregulation. In addition, customers in deregulated markets experienced significant price spikes and rate volatility.
Michigan’s rates have been lower than the rates in almost every deregulated state both in 2008 (a period of high gas prices) and in 2011 (a period of low gas prices), as can be seen in the figure below:
An increase in the deregulation cap would put long-term reliability at risk. In the early years of deregulation, merchant generators across the nation and in Michigan overbuilt capacity based on market expectations that did not materialize and went bankrupt. Deregulated generators have become unwilling to invest for reliability without sufficient assurance of investment recovery.
For the customer participating in the choice program, it represents costs avoided. And for the customer left behind, it represents a cost shift – to small businesses, families and low-income households who can least afford it. - Joe Jones, Grand Rapids Urban League
More than 99% of Michigan’s customers currently pay $300 million per year to support the fixed costs of generation for energy marketers, effectively providing a subsidy to a very small number of customers. The current cost equates to a ~4% impact on utility customer rates. An increase in the deregulation cap would only increase that burden while benefitting a very small number of large companies at the expense of the vast majority of customers.