Bill pending in House may not lead to lower electrical bills
We’re all about paying less for electricity, but we’re unconvinced that a bill pending in the Michigan House would lead to lower bills, and we’re satisfied to see this legislation on a slow track.
Energy deregulation is getting a lot of attention recently, in spite of the fact that a bill that would allow more utilities to sell electricity in Michigan seems unlikely to advance in the Legislature.
Gov. Rick Snyder has already indicated his skepticism, and Senate Majority Leader Randy Richardville, R-Monroe, calls the idea “a strategic mistake.”
Even so, Michigan’s big utilities are making known their opposition, with Consumers Energy already bankrolling issue ads on television and radio opposing House Bill 5154.
Sponsored by Rep. Mike Shirkey, R-Clark Lake, the bill would remove the current cap on electric choice. Michigan law allows customers to choose another electricity provider, but only up to 10 percent of a utility’s electric sales.
The bill also would deregulate rates for Detroit Edison Co. and Consumers Energy, allowing rates to fluctuate with the market without Michigan Public Service Commission review.
The utilities’ opposition to deregulation will no doubt trigger skepticism among consumers and lawmakers understandably wary of monopolies and their impact on rates.
Michigan residents already pay more for electricity than consumers in neighboring Ohio and Illinois, both of which allow competition. A recent poll found that 58 percent of likely Michigan voters would support lifting the cap, a majority that held up in both political parties.
Yet the allure of reducing rates through increased competition may be illusory. Among the 24 states that have enacted electricity deregulation plans, the results are mixed.
Utility executives hoping to reverse public opinion on the issue could point to Pennsylvania. Hundreds of thousands of consumers who signed up for variable-rate plans were surprised to find their monthly bills had tripled or quadrupled in January and February as the demand for power increased during unusually cold weather and the price of electricity went through the roof.
The lesson in Pennsylvania, however, isn’t that deregulation can’t work, but rather how deregulation is implemented requires careful attention to detail and regulatory oversight of how retail providers of electricity set rates. Transparency, of course, is essential.
It’s disheartening to see campaign-style ads used to, essentially, head off the legislative process. Given the public’s interest in electric choice, Shirkey’s bill deserves cautious study.
Now would be a good time to learn from the experiences of other states where electricity deregulation is already part of the landscape.