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Illinois and Ohio Reveal Perils of Electric Deregulation

Debate over how to best secure Michigan’s energy future continues in Lansing, with legislators recently hearing from industry leaders from a number of vital economic sectors. While some have argued for further deregulating Michigan’s electric market, it’s important to keep in mind the dire consequences of full electric deregulation.

Why Electric Deregulation Fails

In the past, we’ve brought you stories from California, Maine, Pennsylvania, New York, and Montana to illustrate the perils of electric deregulation. This time, we’re bringing it closer to home. Illinois and Ohio are two prime examples of how electric deregulation can be a recipe for disaster.

Why? Because deregulated electric markets make it harder for states to plan for capacity needs or make the necessary infrastructure investments to maintain reliable, affordable electricity.

Just look at what has happened since 2005:

Despite the experiences of these other states, some here in Michigan believe we should further deregulate our electric market, and rely even more on out-of-state power from states like Illinois and Ohio.

Illinois Consumers and Economy at Risk

At issue in Illinois is the state’s heavy reliance on nuclear power and the lack of support for those baseload plants (which consistently generate the power necessary to meet minimum demand) in a deregulated electric market. As a result, Illinois consumers and industries are seeing rates spike wildly while they are coming down here in Michigan.

A Capacity and Generation Crisis in Ohio

The situation in Ohio is heating up as more coal-fired power plants are shutting down, with no new plants coming online to replace them. Now, local energy providers in Ohio are scrambling to re-regulate their operations to save their dwindling power plants that are so crucial to the state’s manufacturing sector.

Since 2004, Ohio has retired over 4,000 megawatts of coal-fired electric capacity—enough to power roughly two million homes. With no new net capacity added over the last 10 years, the state now has 2,400 megawatts less generating capacity than it did in 2004.

In response to the growing capacity and generation issues Ohio faces under electric deregulation, FirstEnergy put forth a “Powering Ohio’s Progress” plan that would re-regulate a nuclear station and three coal-fired plants. The proposal calls for all customers (regulated and those served by retail suppliers) to pay all of the plants’ expenses in order to both guarantee revenue and keep the plants online.

Learning from Their Mistakes

Michigan must take heed from these electric deregulation disasters. The unintended consequences of electric deregulation have the potential to cripple our state from every angle, erasing the positive strides our economy has made since the recession in 2008.

With Michigan set to retire plants that generate enough power for two million Michigan homes—we need an electric market that protects the reliable and affordable energy our consumers and businesses demand.

If we put reliability at risk by deregulating electricity further, and relying on Ohio or Illinois to supply us with energy we should be producing ourselves, we will not only threaten our local power plants, but the jobs and economic activity that keep our communities thriving.

This is a critical moment for us to show our support for smart energy policy that puts Michigan first. Don’t delay—contact your legislators in Lansing today.