Michigan is entering one of the largest electric infrastructure investment cycles in its history. Over the next two decades, DTE and Consumers Energy plan to add nearly 30 gigawatts of new generation and storage for wind, solar and natural gas capacities at an estimated cost of $39 billion. That investment could triple electricity rates for everyone. Even then, however, these new resources to generate electricity may not be built fast enough to keep up with increased electricity use.

But Michigan’s Electric Customer Choice Program could help. This program has allowed qualifying customers to purchase electricity from licensed alternative electric suppliers for more than two decades.

Utilities continue to own and operate the transmission and distribution system under the program. They also offer default service (provider of last resort) and are responsible for providing reliable service. The only difference for electric choice customers is how they obtain the generation portion of their electric service. Instead of relying on utility-owned generation that ratepayers pay for, choice customers get their supply from alternative providers who privately finance their own generating capacity.

Michigan’s electric choice program saves electricity customers $185 million a year while providing reliable service. It offers an average of 30% savings for commercial customers and 12% for industrial customers. State law, however, has capped participation in the program since 2008 at 10% of utility sales.

This cap ought to expand. Every megawatt financed by customers in an electric choice program represents one less megawatt that utilities will need to finance and pay for through increased electric rates. A participation rate of 20% would result in $3.5 to $4 billion lower investment by utilities in new generation, and 30% participation would result in $7 to $8 billion lower investment. Lower investment means smaller increases in electric rates.

Consumers Energy and DTE are preparing for a major investment cycle, and state officials should respond. They should expand Michigan’s Electric Customer Choice Program, increase the 10% cap to allow more customers to participate, and let private funding sources finance a larger share of new construction.

With your help, the Mackinac Center is preparing a major study on energy choice and meeting with all players in the energy market to head off Michigan’s looming power emergency.