House Energy and Technology Committee Concludes Its Deregulation Hearings
On Tuesday, March 25, the Michigan House Energy and Technology Committee held a second and final hearing to examine HB 5184.
During the hearing, supporters and opponents of electric deregulation were once again out in full force. Here are some key takeaways from the committee’s second hearing:
- First to testify was Richard Doying, COO of MISO, an independent organization that coordinates, controls, and monitors the use of the electrical transmission system. Doying noted that his organization predicts an upcoming shortage in electric generation in the state, and pointed out that deregulated markets fail to ensure generation capacity is met. He singled out New England’s deregulated wholesale power market as not being able to keep up with energy demand in real time, and addressed the fact that several states with a deregulated electricity market–including Ohio, New York, New Jersey, and Maryland–are now looking at partial re-regulation to address long-term reliability concerns.
- Doying also highlighted the fact that transmission costs under a regulated electric market are likely to be lower than under a deregulated system.
- Michigan Jobs & Energy Coalition Senior Policy Director Steve Transeth further underscored the failure of electric deregulation in other states, saying, “I have yet to see a single state where deregulation has successfully ensured new generation.”
- DTE Energy President and COO Steve Kurmas debunked the myth that electric deregulation leads to lower rates and high satisfaction for consumers. In fact, rates are 25 percent lower in regulated states than deregulated ones, and customer satisfaction is much lower in deregulated states. Illinois, for example, falls in the bottom 20 percent of utility customer satisfaction.
- Kurmas also highlighted the important role local energy providers like DTE play in supporting Michigan communities. Last year alone, DTE spent $809 million with Michigan companies, helping to create thousands of new jobs. They also invest $600 – $800 million each year in Michigan power plants, helping maintain the state’s energy infrastructure. Finally, Kurmas clarified one important fact: deregulation of Michigan’s electricity market would undoubtedly lead to job losses in the state.
- The committee also heard from an AARP representative from Texas, who reaffirmed that “there were rolling blackouts” in the state, contrary to the earlier testimony from a pro-deregulation supporter. The AARP representative went on to say “we disagree that going forward with deregulation would benefit residential customers,” and that they consistently hear from their members who want reliable, regulated electric service instead of a deregulated market.
- Former Michigan Senate Majority Leader Ken Sikkema, who you might remember from our recent tele-town hall, also testified that, “a fully regulated market structure provides the best environment for the risk reduction strategy necessary for Michigan’s energy future.” Sikkema also pointed to the increased volatility in electric rates in deregulated states as evidence of the failure of electric deregulation to provide reliable, affordable energy.
Together, the hearings illustrated that electric deregulation is much more complicated than proponents might like you to believe. AMP maintains its position that electric deregulation, and HB 5184, is the wrong path for Michigan to take given the many risks and unintended consequences we would likely experience.
Overall, we are pleased that so many of the witnesses and legislators present seemed to recognize the risks associated with electric deregulation. Thank you to all the AMP members who took the time to send emails to their elected representatives in Lansing voicing concerns about HB 5184 and electric deregulation. Your messages greatly reinforced the expert testimony legislators heard during the hearings.
We’ll be keeping watch, and keep you posted if other electric deregulation developments arise.