2012 Michigan Energy Symposium Michigan Energy Policy 1)Reliability 2)Competitive Price 3)Protect the environment 4)Adaptability

2012 Michigan Energy Symposium

Reliability

Source: EIA

In a competitive / retail choice market nothing changes regarding the delivery of the electricity. Reliability is maintained by the utilities and transmission companies. For generation, each load serving entity must either own or have under contract enough generation to serve customers. In a competitive market, generation will get built if there is not enough to meet demand.

2012 Michigan Energy Symposium

Competitive Price
Michigan rates compared to national rates, 1990 to present

0.53

0.46

0.41 0.24 0.22 0.19 0.19 0.16

0.36

0.49 0.29

Once competition eliminated, MI electric rates increase above 0.37 national rates again
0.15

0.97

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Feb. -0.11 2012 -0.32 -0.58 -0.67 -0.91 -0.60 -0.76 -0.80 -0.42

Michigan rates were above national average until competition started in 2000

Data from U.S. Energy Information Agency

2012 Michigan Energy Symposium

Protect the Environment
The competitive market will drive the development of technology to meet environmental requirements at the lowest cost to consumers! Under the regulated model, the utilities decide what type of generation they want to build.

2012 Michigan Energy Symposium

Adaptability
The competitive market is quick to adjust to changing market conditions. Recently when electricity demand dropped in Michigan due to the recession and new environmental regulations were being put in place impacting coal fired generation, a competitive supplier responded and canceled plans to build a coal fired generation facility in Michigan. This change did not cost customers anything! Under the regulated model when the utility decided to cancel their plans to build a coal fired generation facility, customers had to pay over $14M to the utility to cover engineering and planning cost.
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2012 Michigan Energy Symposium

Michigan Energy Policy Competitive Retail Choice Market

1)Reliability 2)Competitive Price 3)Protect the environment 4)Adaptability

2012 Michigan Energy Symposium

Michigans Electricity Market A Path Forward
Need to eliminate utility self-implemented rates

Utilities need to utilize ACTUAL COSTS in rate cases not ESTIMATED COSTS WHICH MAY NEVER BE SPENT The public service commission must control utility cost increases by only including in the rates the cost or expense associated with utility decisions or conduct which are both reasonably and prudently incurred and result in investment that is used and useful in providing utility service

2012 Michigan Energy Symposium

Michigans Electricity Market A Path Forward Lets let competition work! Eliminate the 10% cap on participation in Michigans electric choice program Support House Bill 5503 and Senate Bill 1035
Rep. Shirkey and Sen. Meekhof propose to slowly INCREASE the cap.

Moves from 10 to about 20 percent in first year

Additional 6 percent second year Additional 6 percent in third year After that, leave to Michigan Public Service Commission

Allows ALL THOSE WHO HAVE REQUESTED CHOICE access to competition