A Closer Look at Low-Income Families and Electric Deregulation

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Electric deregulation will affect all Michigan electric customers, but it would hit low-income households especially hard.  These homes often include the most vulnerable residents in our communities—the elderly, young children, or medically at-risk individuals.  Unfortunately, the number of low-income households in Michigan has grown during the severe economic downturn of the past several years.

We’ve already discussed some of the detrimental effects of deregulation on these Michiganders, so let’s now take a closer look at who they are so we can better understand why the impact on them is greater. 

Creating Confusion

Deregulation is often pitched by its supporters with the somewhat misleading label of “electric choice.”  While the number of providers is certainly likely to increase, so will the complexity of the contracts.  This will make it harder for low-income residents to make informed decisions regarding their electric service. 

Exposing Vulnerable Residents to Scams

Some low-income individuals, particularly the elderly, are taken in either by aggressive, high-pressure sales tactics by out-of-state retail electric marketers or even by criminals posing as utilities.  These scams are likely to grow in number since consumers may not know who is a legitimate provider, and low-income households desperate to save a few dollars may be more easily taken in. 

As a recent article explains, “A market that lacks both regulation and transparency, with a product everyone buys and few people really understand, has proven a target-rich environment for the kind of operators previously drawn to mortgage rip-offs [and] long-distance schemes.”

Poorer Finances

Even if prices for some were to decrease in a deregulated market, it doesn’t necessarily mean that low-income Michiganders will benefit.  Experience demonstrates that out-of-state energy marketers are likely to target higher-value energy consumers, avoiding low-income consumers.

That means low-income Michigan households—those who can least afford it— will be left to bear a greater share of the costs of our state’s electric system.

Access, Reliability, and Fairness Essential

Lessons from other states warn us of the risks of deregulation.  Without access, reliability, and fairness, low-income Michigan families are needlessly put in jeopardy.  Our state, particularly our lawmakers, have worked hard the past few years to strengthen energy assistance and relieve some of the burdens faced by these residents. In addition, our Michigan-based energy providers work closely with struggling households to help them pay their bills and keep their power on.  Out-of-state providers will likely not have the same commitment to keeping energy reliable and accessible for the Michiganders most in need.

Help stop deregulation in its tracks by taking action now.