MIDLAND, Mich. — Affordable, reliable electricity has improved human life in radical ways. Despite its importance, too few understand how the process works, which includes producing energy, converting it into useful electricity and delivering it to Michigan homes. To provide a better understanding of Michigan’s electricity system, the Mackinac Center for Public Policy has released a new report. “Electricity in Michigan: A Primer” explains how electricity is generated, transmitted and used throughout the state.
In Michigan, electricity is generated using a variety of technologies and fuels: steam and gas turbines, internal combustion engines, hydroelectric and other variable renewable technologies like wind and solar. A mix of coal, natural gas and nuclear provided almost 90% of our electricity in 2018, while wind and solar combined to provide less than 5%. This ratio will likely change as the state government and major public utilities have committed to expand renewable energy generation, while decommissioning energy sources like coal and nuclear, as well as many natural gas plants.
Public utilities and other alternative generation companies across the state generate electricity. This electricity is then transported via high voltage electric lines operated by separate transmission companies: International Transmission Company in the Lower Peninsula and The American Transmission Company in the Upper Peninsula. High voltage electricity is then “stepped down” and distributed by public and municipal utilities and electricity co-ops to businesses, schools and homes.
In the Lower Peninsula, the majority of electricity is generated and distributed by two utilities, DTE and Consumers Energy. In the Upper Peninsula, the majority of electricity is generated and distributed by the Upper Peninsula Power Company and Upper Michigan Energy Resources Company.
These utilities are private companies that have been granted the monopoly right to supply 90% of retail electricity in their operating areas. The electric rates and services these companies provide are monitored and approved by a state regulatory agency called the Michigan Public Service Commission. The remaining 10% of retail electric service operates under market forces, where electricity providers must compete for market share. A lack of competition in energy suppliers has led to increased costs and reduced reliability for Michigan’s ratepayers.
“Access to affordable, reliable, safe electricity has fundamentally transformed human life on this planet,” said Jason Hayes, director of environmental policy at the Mackinac Center. “We use electricity to keep ourselves comfortable, to educate and inform, and to carry out business. The lack of competition and choice that is mandated by Michigan’s monopoly utility system limits reliability and increases costs for every Michigan resident. But a better understanding of our electricity system may begin to help legislators and residents to push for more effective energy options.”
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.