Grand Rapids Urban League: Deregulated market harms low-income ratepayers, small businesses
Out-of-state energy marketers’ ‘cherry-picking’ of preferred recipients to force remaining customers to shoulder the bulk of fixed costs
LANSING, Mich. – The leader of a well-known West Michigan community organization called on Gov. Rick Snyder’s administration, the Michigan Energy Office and state lawmakers to carefully review the effects of electric deregulation and how an increase above the current 10 percent cap would affect low-income families and small businesses.
Joe Jones, president and chief executive officer of the Grand Rapids Urban League, is concerned about how an increase in deregulation options for some more well-heeled customers likely would impact residential energy users, particularly the disadvantaged.
“It has been suggested that if (deregulation) was to be made immediately available to all customers currently in the so-called ‘choice queue,’ that those customers could see significant savings,” Jones said. “I humbly suggest that this proposed change does not represent ‘savings.’
“Quite the contrary. 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.”
Jones is scheduled to speak at the second of seven public forums on “Readying Michigan to Make Good Energy Decisions” Monday afternoon at Grand Valley State. The information collected at each of the hearings will support and guide lawmakers and the administration as they continue to support energy policies that provide affordable, reliable and environmentally responsible energy.
The 4,500-member Michigan Jobs and Energy Coalition – which comprises groups and organizations such as the Michigan Chamber of Commerce, Michigan Manufacturers Association and the Michigan Regional Council of Millwrights and Carpenters – supports a thorough, fact-based review of Michigan’s current policy, recognizing the delicate but important balance between affordability, reliability, price stability and a diverse set of energy sources.
The MJEC also recognizes the importance of supporting Michigan’s 54 hometown energy providers, a group that comprises Detroit Edison (DTE), Consumers Energy, 41 municipal electric companies and 11 electric cooperatives. These highly regulated Michigan-based energy providers generate, transmit and distribute power to millions of families and businesses statewide.
“A state’s energy policy should be based on research and analysis,” said Ken Sikkema, former Senate Majority Leader and current Senior Policy Fellow at Public Sector Consultants. “Michigan currently has a plan that is designed to spur investment in clean energy and other technologies, create jobs, maintain reliability and provide affordable rates for customers.”
Michigan’s current policy – one of the most comprehensive energy policies in the country – was signed into law in 2008 after two years of thorough and exhaustive review. The successful policy helped power Michigan’s economic recovery, provided regulatory certainty to encourage investment, renewed Michigan’s energy infrastructure and boosted clean energy investments.
As a result, the state was positioned to diversify its energy portfolio, building power to meet future demand. In fact, DTE and Consumers Energy are investing more than $800 million to upgrade the Ludington Pumped Storage Plant. Consumers Energy also recently announced its plan to invest $750 million in a new natural gas plant in Genesee County.
Michigan’s energy policy, which currently allows up to 10 percent of the energy market to be served by out-of-state energy companies, was established to protect customers from shouldering more than their fair share of fixed energy costs. Fixed energy costs include investment the state’s hometown providers have already made to provide affordable, reliable power to all Michigan residents.
Since 2008, more than $4 billion of investments have been made in the state’s energy infra-structure, such as renewable energy projects and power plant upgrades. This has helped provide greater reliability and has guarded against market price volatility for Michigan customers.
“A state’s energy policy should be flexible and responsive to changing technological and market conditions,” Sikkema said.