While debate continues in Lansing over the future of energy policy in Michigan, it’s important to remember the lessons from other states that have experimented with electric deregulation and failed.
These same problems – higher rates, loss of control, and less reliability – await Michigan if we allow out-of-state companies to control Michigan’s energy future.
Deregulating electricity markets is often touted as a way to encourage competition and bring down costs. But examples from across the country highlight that costs often skyrocket due to price manipulation and reliability issues.
For example, from 2006 – 2007, New Yorkers paid an estimated $4 billion more for electricity than they would have without deregulation. At fault were out-of-state electric companies using aggressive and manipulative marketing tactics to confuse ratepayers into switching suppliers, and then lining their corporate pockets with the profits as consumers’ rates skyrocketed.
One of those companies, Texas-based Ambit Energy, is also a provider in Michigan and is urging Lansing to further deregulate our electricity market. Our legislators should be very wary.
Loss of control
Montana is a tragic example of what happens when state utilities cede control of their facilities to out-of-state interests.
After lobbying the state legislature to deregulate, Montana Power Company, the state’s only Fortune 500 Company that had been providing the lowest energy rates in the country, sold its energy assets to two out-of-state companies:
The results were disastrous. Pennsylvania Power and Light sent the energy generated in Montana to other markets, leaving Montanans with limited supply and much higher rates.
Ohio faces a looming reliability threat – the result of a nasty combination of deregulation and power plant retirements. The state has already retired 4,000 megawatts of production and is set to retire 6,500 more megawatts. However, thanks to electric deregulation, the funding for replacing these plants is just not there.
As Michigan will be forced to retire nine coal-fired power plants in 2016, and 20 power plants by 2020, the outlook for us could be grimly similar if the problems with electric deregulation aren’t addressed. A total of 100 coal-fired power plants will likely be retired throughout the Midwest in 2016, so we simply must not find ourselves in a situation where we are dependent on energy from other states.
Regulation is Key
The secret to avoiding these pitfalls is not a secret at all. Well-regulated utilities can provide Michigan with reliable and affordable electricity, as well as providing innovative solutions to replace coal-fired generation.
Have you taken action to urge Lansing to put forth a smart, comprehensive energy policy to secure Michigan’s energy future? If not, send a quick message today!