When unconstrained by price controls and regulatory mandates, competition in energy supply has delivered benefits to Michigan. Capacity needs vary across the state, which argues against a sweeping legislative response. In fact, the most direct way to expand generating capacity is to make the state more attractive for energy investment. Costly new regulation and restrictions on competition in electricity supply would actually harm rather than benefit Michigan consumers and the businesses that employ them.

Recommendations

  • Reject any attempt to curtail competition in energy supplies. Limits on competition would raise energy prices and deepen the state’s economic woes, while dissuading investors from building new generating capacity in Michigan.

  • Eliminate peak capacity requirements. Ratepayers could be freed from the stranded-cost regime, and incumbent utilities would be better positioned to compete. Energy suppliers have every incentive to meet market demand for electricity.

  • Rationalize rates. Subsidies of one customer class by another, such as artificially high rates for commercial service to subsidize residential rates, should be eliminated from the regulated rates of incumbent utilities. Such skewed rates interfere with the price signals necessary for energy conservation and effective competition.

  • Reject purchase quotas for renewable energy. Subsidizing renewable energy facilities could actually delay development of cost-effective alternatives by easing the competitive pressures on renewable energy suppliers to improve their product. Moreover, forcing ratepayers to buy higher cost energy constitutes an energy tax that Michigan families can ill afford.

  • Amend state law to allow yard waste deposits in landfills; the deposits produce methane that can be tapped to generate electricity. There is no reason for the state to maintain regulatory barriers to the use of alternative energy sources, especially when state officials are calling for increased use of renewable energy.

  • Resist attempts to empower the Public Service Commission to control development of new power plants. Market competition can produce the appropriate supply of energy far more efficiently and affordably than government regulators.

  • Reject proposals to empower the Public Service Commission to block mergers and acquisitions of energy firms. Such authority would duplicate the merger review powers already exercised by the U.S. Department of Justice, the Federal Energy Regulatory Commission, the Federal Trade Commission, the U.S. Nuclear Regulatory Commission (if nuclear power plants are involved) and the Michigan Attorney General’s office. It is unlikely that Michigan ratepayers would gain any benefit from allowing the MPSC to intervene in merger cases under review by federal and state agencies. Even worse, one House bill would, if enacted, give the MPSC free rein to determine the standards of review.[42] This would invite even more arbitrary regulation, further eroding Michigan’s ability to attract investment and job creation.

  • Reject attempts to impose state efficiency standards on appliances and other household products. Such mandates can raise the prices of new appliances, leading many homeowners to delay new purchases and continue to operate older, less efficient models.