"Securitization": Another Word for Ransom

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Michigan’s heavily regulated utility market means we pay electric bills fifteen percent higher than those in neighboring states. That could finally end when the legislature resumes debate on deregulating electricity, but all bets are off if something called “securitization” makes it into law.

The best electricity deregulation plans lower prices by allowing energy users to choose the provider that offers the best combination of cost and service. But the big monopoly utilities—most notably Detroit Edison and Consumers Energy—want you to pay them for the privilege of shopping around.

How could this happen? The utility industry wants the state to mandate extra surcharges on everyone’s electric bill; even for those who change electric companies. These extra surcharges would be used to pay for so-called “securitization”: that is, a multi-billion-dollar cash payment the utilities say they need to cover future losses on their past investments.

This is as if long-time Ford customers had to send a check to Ford Motor Company if they ever wanted to shop for Chevys.

Legislators should not let power companies collect a ransom from their customers. Utilities, like any other company, should have to earn their customers’ business.

For the Mackinac Center, this is Catherine Martin.