ISSUE #1: Retail customer choice agenda and schedule

The MPSC Staff Report wisely speeds up the Jobs Commission’s direct access deployment schedule by demanding that a much greater amount of new load be available to customers on a competitive basis. Starting this year, Michigan utilities would be required to make at least 2.5 percent of their load available for direct access competition. For Detroit Edison and Consumers Energy Company, this would equal 225MW and 150MW blocks of load, respectively. Finally, under the original MPSC draft plan, by 2001, all commercial and industrial customers would be given full competitive access while residential customers would be phased in at a rate of 2.5 percent per year. By 2004, all residential customers would be guaranteed choice as well.

Although the direct access schedule contained in the original MPSC Staff Report is a clear improvement over the much less ambitious Jobs Commission report, it still fails to take these crucial steps rapidly enough. There is simply no reason to delay the immediate transition to competition for all customers. Denying residential customers full competitive choice while industrial and commercial users enjoy the fruits of competition will lead to calls of an uneven playing field or corporate favoritism. As Michigan Attorney General Frank Kelley aptly argued in testimony before the MPSC on January 14:

"I am dismayed that the plan continues to contain a divisive dichotomy between business customers and residential customers. . . . I cannot support a plan that does not permit all customers to have equal access to power suppliers. Commercial and industrial customers must not be permitted to lock up available low-cost power from 2001 to 2004, leaving only higher priced power for residential customers. The goal of restructuring must be to bring the benefits of a competitive generation market to all customers, not just a few." 19 

Luckily, when the Commission handed down its final Opinion and Order on June 5, part of this problem had been corrected. The Commission conceded that asymmetrical treatment of customers would be unfair, and therefore, the phase-in schedule for direct access will now apply to all customer classes equally.

Unfortunately, however, the gradual phase-in itself remains unaltered. The Commission apparently remains committed to a staggered transition to full customer choice. This is unfortunate and unnecessary. All customers could be granted choice much earlier than the Commission’s planned timetable allows. Indeed, if Michigan policy makers want to remain in line with, or ahead of, the timetables established by other states, this timetable must be accelerated so that all customer classes are guaranteed choice long before the current 2002 date set by the Commission.

Recommended Action #1: Grant all consumers choice immediately.