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Electric Deregulation and (Lack of) Capacity

We’ve talked about electric deregulation in the past, but what we haven’t gotten into is the impact risky deregulation schemes have on Michigan’s electric generation capacity. With our state facing increasing energy demands and a looming electric capacity crisis, it’s important that we start that discussion now. 

Here is what’s happening:

• In 2008, Michigan passed a law that deregulated 10% of our state’s electricity market, opening up a portion of our electric market to out-of-state retail energy marketers.

• These companies don’t in any way contribute to managing Michigan’s electricity supply, maintaining our electric infrastructure, or ensuring reliability, yet they profit from Michiganders and use our energy infrastructure to deliver their power.

• Michigan-based energy producers and the vast majority of Michigan families and businesses must foot the bill to support our state’s electric infrastructure—the same infrastructure everyone uses. Because of this unfair shifting of costs, and the fact that deregulation drives economic activity out of state, it is harder for Michigan to attract the necessary investments to build new generating capacity, make infrastructure improvements, and ensure stable energy prices and reliable access for all Michigan residents and businesses. 

For the last few decades, Michigan has enjoyed an energy surplus, so we haven’t had to confront this aspect of the deregulation issue as directly.  Now, however, Michigan is facing the closure of nine of our existing power plants—due in part to their age and in part to new U.S. Environmental Protection Agency (EPA) power generation emissions regulations.

These coal-fired plants were built many decades ago, and it is simply not feasible to retrofit them to meet new requirements.  Even without the closure of these plants, Michigan was still looking at a significant crisis in our energy capacity.  Deregulation makes a bad problem worse by limiting the resources available to invest in new facilities and new technologies that will enable us to fulfill our own energy needs and new emissions requirements.

Electric Deregulation’s Impact

Amazingly, some Michigan legislators are still wedded to electric deregulation, despite its failures here in Michigan and in other states, like California. Some are so committed to this bad idea they even introduced a bill last year to promote deregulation.

But as we highlighted in a blog post from November, the deregulation approach hasn’t worked for Michigan—or anywhere else. It’s simply not smart energy policy. Calls to double down on this failed policy should be rejected outright by legislators on both sides of the aisle.

The legislature must enact flexible, smart energy policies this year that ensure Michigan maintains a supply of reliable, affordable, clean energy produced by Michiganders, for Michiganders.  It’s vital to our economy, and it’s the only way we can be sure Michigan will enjoy a secure energy future—one that is bright for everyone who lives and works here.

We’ll be exploring this issue in greater detail in the coming weeks, so stay tuned for more information, and thanks for your support.