Historically, the provision of electricity in Michigan was considered to be a
"natural monopoly." The theory of natural monopoly, now largely questioned,
presumes that building competing electricity infrastructure would be too costly
for a second electricity supplier to afford. The customer base and price of
electricity supposedly are insufficient to recover the capital investment
required to construct competing facilities. Consequently, the state bestowed
regional monopoly status on select utilities and imposed price controls and
other regulations to temper their monopoly market power.
According to the Michigan Public Service Commission, "As of December 31,
2007, about 4,835 commercial and industrial customers were participating in
Michigan’s electric choice programs. This represented over four percent or
311,310 megawatt-hours (MWh) of the total [average monthly] sales in energy
usage of the combined Detroit Edison and Consumers Energy service territories
(down from about six percent in 2006)."[*][3]
The remaining customer base is served by smaller utilities, electricity
cooperatives or municipal systems.
Source: U.S. Energy Information Administration.[4]
Coal-fired power plants dominate electricity generation in Michigan, fueling
about 60 percent of the nearly 113 million megawatt-hours produced in the state
in 2006, the latest year for which figures are available.[5]
Most of the coal is transported by rail from Wyoming and Montana and distributed
by ships to power plants largely located along the Great Lakes shores. Some coal
is obtained from West Virginia, Kentucky and Pennsylvania as well.
Nuclear power from three plants provides about 26 percent of the electricity
generated in Michigan, while natural gas accounts for about 10 percent.[6]
At present, three utility-scale wind turbines also operate in Michigan,
generating a small fraction of the state’s electricity.
Source: Energy Information Administration.[7]
(Note: A miscellaneous category, amounting to 0.5 percent of the total, is omitted above. The percentages in the graphic total more than 100 because they do not include small losses attributed to pumped storage.)
[*] This sentence has been altered since the original Web posting of this study. The words “average monthly” have been inserted to remove an ambiguity in the MPSC’s original quote.
