aric nesbitt
Rep. Aric Nesbitt, chair of the House Energy Policy Committee, lays out his plan for Michigan's energy future.
(Emily Lawler | MLive.com)
LANSING, MI - The ability of electric customers to buy electricity from out of state would go away under the energy plan proposed by House Energy Policy Chair Aric Nesbitt, R-Lawton.
"This proposal does go back to a fully regulated market which I believe is the best way to assure reliability for ratepayers throughout the state," Nesbitt said.
Currently, utilities must allow customers to purchase up to 10 percent of the utility's total capacity from out-of-state markets. Large companies sometimes take advantage of this to get cheaper energy because Michigan's is more expensive than other Midwestern states.
The state's two biggest utility companies testified last week about a looming energy shortfall, and attributed the uncertainty in Michigan's energy future to customers currently purchasing power from out-of-state companies.
Nesbitt said while he originally leaned toward electric choice, it took him about a year and a half to come to the conclusion that fully regulating electricity made more sense. Part of that is because electric companies have a mandated oversupply; the companies need reserve capacity to dip into on a few heavy-use days per year.
"Over the last 35 years we've had great success in a lot of the deregulations on many different industries... however, as you look at electricity, those markets lend itself to a natural monopoly," Nesbitt said.
The Michigan Freedom Fund called on lawmakers to defend free market principles.
"Eliminating electric choice means abandoning free market principles and sticking Michiganders with hundreds of million in higher rates on their electricity - while two giant monopoly utilities rake in the profits," said MFF President Greg McNeilly.
Nesbitt's legislation doesn't sit well with groups like Energy Choice Now and the Association of Businesses Advocating Tariff Equity, which have been pursuing exactly the opposite tact and advocating for complete deregulation of the state's energy industry.
"This isn't' rocket science. Do you want to buy a loaf of bread from the only supermarket that has bread? Or do you want to have a choice of three or four supermarkets that sell bread?" said Rick Coy of ABATE.
Coy said that companies purchasing power from out-of-state would have to pay millions more if they were required to purchase power from in-state. ECN puts the number at billions.
Nesbitt, meanwhile, said he expects his entire plan to decrease rates by up to 7 percent.
His plan also rankled environmental groups by suggesting the state keep its renewable portfolio standards, which mandate utilities get 10 percent of their energy from renewable sources by 2015. Environmentalists would like to see that percentage go up. So too would Democrats, who have proposed raising it to 20 percent renewables by 2022.
"Energy policy reform must move us away from dirty, outdated sources of energy like coal, eliminate energy waste and ensure Michiganders have clean, reliable and affordable energy into the future," said Michigan League of Conservation Voters Executive Director Lisa Wozniak. "From what we understand, the Chairman's package contradicts these goals by eliminating Michigan's successful energy efficiency program, weakening Michigan's renewable energy economy and opening the door to the generation of dirty energy sources that pollute our air and drinking water. This is an energy plan that moves Michigan backward."
Nesbitt's plan also includes consumer protections like removing the ability of utilities to self-implement rate changes and re-forming the Utility Consumer Protection Board to advocate for residential consumers. It would require utilities to integrate energy efficiency plans into their Integrated Resource Plans.
Nesbitt introduced the legislation on Wednesday.
Update: This article has been corrected to reflect that the regulation change could affect all electricity users and not just large customers.
Emily Lawler is a Capitol/Lansing business reporter for MLive. You can reach her at elawler@mlive.com, subscribe to her on Facebook or follow her on Twitter: @emilyjanelawler.