Michigan should not allow more electric competition now, but real debate should be on the horizon

Guest Editorial
Give state Rep. Mike Shirkey credit for being fearless. The lawmaker from Clark Lake is proposing legislation allowing more businesses to leave energy utilities such as Consumers Energy — never mind that the company sits in his backyard.

Shirkey, a first-term Republican, is bucking the opinions of Consumers and many colleagues in his own party in a quest that appears to be ideologically driven. He wants more companies to have the freedom to choose their electricity provider. Those businesses today are limited by Michigan’s 2008 energy law, which prevents them from jumping ship once a utility such as Consumers has lost customers that represent 10 percent of its production.

There is a good reason why Shirkey received a cool reception from fellow lawmakers and outright opposition from Consumers. His legislation is bad policy.

It would take the current system — in which a select few winners are allowed to grab lower rates, leaving many others behind — and make it worse. True, more companies would be able to migrate to lower-cost competitors, but remaining customers (likely, homeowners, renters or small businesses) would be stuck paying for the infrastructure costs that Consumers says it can’t shed. It would pass along some $400 million costs to its remaining customers, well more than $200 per household, per year.

While Shirkey’s proposal faces long odds, it does some good. It nudges the door open for a real debate over Michigan’s energy policy. While the 2008 law had some merits, … few predicted just how unworkable this 10 percent cap would be.

Some businesses that remain with Consumers or DTE Energy complain the disparity between their prices and what competitors offer is significant. There is a waiting list of somewhere near 4,000 businesses that want to leave. A few have said they could end up leaving Michigan without relief.

So far, the Legislature has done nothing to the 2008 law. A committee led by Sen. Mike Nofs, who represents most of Jackson County, held hearings last year but recommended no changes.

For the sake of Michigan’s economy, the status quo can’t continue indefinitely. The Legislature ought to either eliminate electric choice — putting all businesses on the same playing field — or deregulate Michigan’s electric market entirely. Both are flawed ideas: Total regulation hurts some businesses that have left Consumers and DTE today; deregulation could lead to swings in energy prices.

We don’t see the practical benefit to Shirkey’s legislation. It would exacerbate the current state of winners and losers, and make electricity far more expensive for many customers.

But if it helps move this issue out of the background, it will have been a plus. The state’s energy law, which turns 4 this year, is flawed and needs to be reformed.