New Study Warns Against Re-regulating Michigan’s Electricity Market

Proposed Bills in State Legislature Would Harm Consumers and Decrease Reliability of Supply

For Immediate Release

MIDLAND – A package of bills introduced in the Michigan Legislature this month threatens to end the lower prices and improved service enjoyed by Michigan’s electrical consumers as a result of deregulation, according to a study published today by the Mackinac Center for Public Policy and authored by Theodore Bolema, a professor at Central Michigan University. Bolema, who discussed the results of the study at a Mackinac Center luncheon in Lansing on July 21, finds that Michigan’s deregulation is "progressing on course" and that despite the current advertising campaign meant to scare consumers into supporting re-regulation, there is no electricity crisis on the horizon.

Michigan does not face the risk of a California-style electricity shortage, he writes, since "few, if any, of the same contributing factors [in California] exist in Michigan." Moreover, "by market standards," DTE, the state’s largest producer of power, "remains strong," posting higher earnings and stock prices following the advent of electrical deregulation in 2000.

The study concludes with four legislative recommendations that would do a better job of addressing the current inefficiencies in Michigan’s electrical market:

  1. Level the playing field by lifting the requirement that some utilities be providers of "last resort" at regulated rates.

  2. Remove unfair and destructive subsidies to remote areas.

  3. Ensure that any new home heating assistance comes from the state’s General Fund.

  4. Repeal immediately the price caps currently scheduled to expire in 2006.

Professor Bolema elaborated on his findings and recommendations at the Mackinac Center’s July 21st "Issues and Ideas Luncheon," in Lansing. The presentation slides used by Dr. Bolema can be viewed here.

A copy of the study, titled "Assessing Electric Choice in Michigan," is posted at www.mackinac.org/6693. Senate Bills 1331 through 1336, which are the subject of the study, can be tracked at www.michiganvotes.org.

- 30 -

Share More …