This policy brief is written by the Mackinac Center for Public Policy in response to the report issued on Oct. 15, 2013, by the Michigan Public Service Commission titled "Readying Michigan to Make Good Energy Decisions: Electric Choice," (the "Draft Report") authored by Chairman John Quackenbush and Michigan Energy Office Director Steve Bakkal.

Between the years 2000 and 2012 two distinct changes emerged. Between 2000 and 2008 new suppliers were allowed to start entering the Michigan market and competing with incumbent utilities. Between 2008 and 2012 competition was restricted to guarantee a 90 percent market share for the largest utilities. The analysis of these two periods suggests that market competition tends to bring innovation and lower prices to Michigan electricity consumers, while monopolistic policies tend to raise prices. Michigan should once again embrace opening its electricity market to more entrants to see if they can perform better than the incumbent firms, which will drive down prices for electricity consumers. Michigan allowed such competition to start to emerge during its brief era of Full Customer Choice, and the early results were promising. The initial results from a more tightly regulated and protectionist experiment have been by contrast disappointing.

A video recording of the January 22, 2014 Issues and Ideas Forum featuring the author discussing the topic of expanding the electricity market can be viewed here.

Contents

S2013-09