Electric Choice was first introduced in Michigan by Public Act 141 in 2000. One goal of the Act was to have competition within the electric industry by offering Michigan customers the opportunity to purchase electric generation services from their incumbent utility or an Alternative Electric Supplier (AES). Public Act 141 was later amended by Public Act 286 of 2008, placing a limit on electric choice. The law provides that no more than 10 percent of an electric utility's average weather-adjusted retail sales for the preceding calendar year may take service from an alternative electric supplier at any time. In recent years, members of the legislature have introduced bills that would either expand or reduce the amount of electric choice in Michigan. The regulatory structure of the states surrounding Michigan varies. Indiana and Wisconsin are both fully regulated and do not provide for electric choice. Illinois has fully restructured, allowing electricity choice without any limit. Ontario has restructured, and Ohio has recently changed its regulatory structure to allow for more electric choice.
The most recent report prepared by the Michigan Public Service Commission discussing electric choice in Michigan, titled Status of Electric Competition in Michigan, may provide a useful reference.
As we approach 2015, policymakers will be considering Michigan's energy future. In order to educate the citizens of Michigan about electric choice, we have developed the following questions:
- 24. From an economic standpoint, what is the impact on Michigan of the jobs, infrastructure, supplier base, and tax base provided under the current regulatory structure versus what could be expected under an open market system?
- 25. What percentage of the 10% cap has been utilized by industrial, commercial and residential customers?
- 26. What impact, if any, has there been on the rates paid by Michigan residential customers as the result of Michigan's electric choice program?
Click on the Question to Comment through April 25, 2013
- 1. Since the passage of PA 141 of 2000 and PA 286 of 2008, what has been the experience with retail electric choice in Michigan in terms of participation (number and load of choice customers, customers in the queue,
and number of competitive providers by customer class) and customer savings?
- 2. What approaches to retail electric market structure have been tried in Michigan and in other states and jurisdictions?
- 3. What is the experience with retail electric choice in other states / provinces / countries in terms of customer participation, rates, savings, competitive providers, and other characteristics? How was the transition to choice, to full restructuring,
or to re-regulation handled from an implementation standpoint?
- 4. How are other retail electric choice (i.e., restructured) states similar or dissimilar to Michigan in terms of market structure (divestiture of utility business units), resource mix, generation capacity, and incumbent prices relative to competitive market prices?
- 5. Are electric rates lower in choice states than fully regulated states after considering historical trends as well as rate freezes, price caps, and re-regulation?
- 6. Would a change in the choice cap have an impact on the financial stability of utilities and investors' ability to make long-term, substantial investments in new generation?
What are the potential implications (benefits, costs, risks) of a greater or lesser reliance on wholesale markets to meet long-term capacity needs?
- 7. What has been the experience of other states in terms of meeting capacity needs under various market regimes (i.e. fully regulated, partially restructured, and restructured)?
- 8. What market forces, policy or other factors could change the current market dynamic for choice? How many of these factors affect the viability of choice in Michigan?
- 9. What are the historical trends vis a vis other states regarding reliability, affordability, and environmental protection under the different regulatory structures Michigan has tried?
- 10. What kind of future changes could have a strong effect on affordability, reliability, and environmental protection under different regimes?
- 11. What data and studies should be reviewed and prepared to determine how various market structures impact rate levels, rate volatility, and reliability over all stages of the commodity cycle?
- 12. What data and studies would help identify the relative importance of pricing stability and market-based pricing to Michigan residents and businesses?
- 13. How has Michigan, and how have other states, addressed the issue of stranded costs?
- 14. What policies have been proposed or implemented by Michigan and other jurisdictions to ensure pricing visibility?
- 15. What has Michigan, and what have other jurisdictions, proposed or put in place regarding alternative electric supplier (AES) licensing process or requirements?
- 16. How has Michigan, and how have other jurisdictions, treated the various customer classes in terms of participation in restructured retail markets or partially restructured retail markets?
- 17. What have been the impacts of structurally separating transmission and distribution in Michigan?
- 18. What data or studies exist regarding the effect of a strategy of divestiture or structural separation of generation assets when moving to a restructured retail market?
- 19. What data or studies exist regarding the costs or benefits of having an integrated electrical system (generation/transmission/distribution) versus a system that separates some or all of these roles among different entities?
- 20. What data or studies should be reviewed or prepared to determine the likely effects of possible methods to calculate and recover stranded costs?
- 21. How have various restructured or partially restructured retail markets handled the issues of low-income customers and uncollectibles?
- 22. With full retail restructuring, what data or studies are available regarding the impact of having a supplier of last resort or having no such supplier?
- 23. What legal arguments regarding interference with contracts have been offered in the restructuring or re-regulation contexts, and what were the results of any adjudication of those arguments by commissions or courts?