Regulation key to affordable electric service
by Steven Transeth, Michigan Jobs and Energy Coalition Energy Policy Director
Here in Michigan it is easy to assume the lights will always come on, our computers and cellphones will have power and business will continue as normal — until they don’t.
The challenges we face on energy issues over the next couple of decades exceed all those of the past 150 years. Over the next year the Michigan Legislature will be making key decisions which will determine how successful we are in meeting those challenges.
At the end of the day, Michigan needs an energy policy that recognizes the long-term nature of the electric industry and creates a regulatory framework that enables price stability, provides reliability and ensures capital investments to build new generation.
Michigan’s current energy law was adopted in 2008 with strong bipartisan support.
It works well and delivers the results the Legislature intended in each of those three categories. The law was designed specifically to protect the integrity of Michigan’s energy system so it can meet the state’s future energy needs. The reason this law has worked is because it made Michigan the priority.
Unfortunately, these successful policies are now under attack by those who want to enrich out-of-state companies by seeking to deregulate our electric rates — at the expense of our families and small businesses.
We cannot ignore the fact that those pushing for deregulation are driven by the bottom line with little regard to advancing Michigan’s interest. Deregulation will dangerously expose millions of customers to higher rates by focusing only on short-term and temporary benefits for a handful of businesses.
Nor should we let the current but very temporary favorable markets dictate future policy.
A review of the history of rates over the past 20 years clearly demonstrates that deregulation has not only failed to deliver lower prices but in most cases, caused price increases.
Deregulation also will threaten the development and deployment of renewable energy and energy efficiency programs, quality standards for service, the protections of a provider of last resort, and the assistance afforded to our seniors and low-income families.
The traditional concept and focus of deregulation does not account for the unique characteristics of electricity and the electric utility sector. Electricity is not becoming less relevant but has become the essential service and its complexity far exceeds the nature and scope of any other industry in which we have attempted deregulation. More than affordability, these unique characteristics require a predictable regulatory environment that promotes certainty, long-term infrastructure investment, and price stability.
States with deregulated electric markets such as California, Maryland, New Jersey and Texas are struggling to attract investment in new power generation and are concerned about reliability and reserve margins. In fact, a recent reliability assessment from the Federal Energy Regulatory Commission’s Office of Electric Reliability has found that both California and Texas are facing a significant chance of an energy emergency (blackouts).
Regulation when applied correctly has proven to be an effective model in controlling rates but more importantly, is fundamental to maintaining a reliable electric delivery system.