Published in The Detroit News
By Rep. Gary Glenn
Michigan’s economy is hindered by an arbitrary law allowing only 10 percent of electricity users to buy from an alternative provider, guaranteeing Consumers Energy and Detroit Edison 90 percent of the market. Utility monopoly-backed legislation to eliminate electricity choice altogether would further damage our economy, schools in particular.
Senate Bill 437 and House Bill 4298 — by imposing burdensome restrictions that force alternative suppliers out of business — would force schools currently under the cap to pay an additional $15 million annually for electricity, forcing them to lay off 300 teachers or cut programs. Other Michigan employers and employees would also be hard hit by moving to a 100 percent monopoly system.
I’m introducing bipartisan Michigan Energy Freedom Reform legislation that embraces competition and expands consumer choice.
It would allow all K-12 schools, colleges, universities, and state and local governments to buy less expensive electricity, saving taxpayers millions a year. Clarkston schools save $350,000 a year. Macomb Community College and Oakland County government save $500,000 a year. Under my proposal, all taxpayer-funded entities would be free to choose and save taxpayers money.
Hospitals would also be free to choose, helping hold down state Medicaid expenditures. Beaumont Hospitals calculate they’d save $3 million a year, but under the current cap, cannot.
Residential customers would also be free to choose if they purchase renewable energy or sign “energy efficiency” contracts to reduce electricity use during peak demands.
Such competition and consumer choice will hold down electricity prices just as they do throughout our economy. Employers compete every day for our business, striving to offer the best product at the best price.
Understandably, the two government-privileged monopolies oppose competition and consumer choice. They’re spending millions on misleading TV ads that frighten consumers with scare tactic claims of a non-existent energy shortage, trying to convince legislators to completely eliminate your right to buy electricity elsewhere.
The state House and Senate legislation now being considered would force competing electricity suppliers out of business and force thousands of electricity customers — including schools — to return to the higher-priced utilities. Plus, no electricity user would ever be free to choose again.
That’s bad news when Michigan’s electricity rates are highest in the Midwest and 11th highest in the nation.
Utility lobbyists claimed in 2008 that to invest in building new power plants, they needed 90 percent of the market guaranteed by law. Lawmakers consented. Seven years later, no new plants have been built, and monopolists now argue they want 100 percent before building.
Meanwhile, in Ohio, with no monopoly guarantee and where utilities have to compete for customers, the Akron Beacon Journal reported July 21 that six new plants — all built by private companies — are expected to be operational by 2019. “Those six projects together will result in expenditures of $3.8 billion and produce 4,238 megawatts of electricity,” the paper reported. It’s also no surprise that electricity rates in Ohio, a free competition state, are cheaper than in Michigan’s 90 percent monopoly market.
Hillsdale College economics Professor Gary Wolfram’s new study found Michigan’s monopoly market is not only the Midwest’s most expensive, but least reliable. Wolfram’s top policy proposal: “Expand retail competition to put pressure on the public utilities to improve their production and reduce rates, or face the loss of their customer base.”
Economists who’ve studied Michigan’s monopoly system predict that giving customers choice would also create 21,000 new jobs a year.
Michigan families, schools, job providers, hospitals, and governments deserve expanded electricity choice — to lower prices, stimulate plant construction, create jobs, and save taxpayers money. To empower Michigan’s energy future, urge legislators to oppose monopoly utility efforts to kill electricity choice. Support expanding competition and choice with bipartisan Michigan Energy Freedom Reforms.
Rep. Glenn, R-Midland, serves as majority vice chairman of the state House Energy Policy Committee.