The MPSC and the Importance of Regulating Electric Power

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As you likely already know, electric deregulation is a primary issue for AMP because of the risks it carries for Michigan. Almost a decade ago, a number of bad experiences with electric deregulation across the country led most states either to table their experiments with deregulation or try to re-regulate.  But, as Michiganders begin to see the light at the end of the Great Recession’s dark tunnel, electric deregulation is unfortunately back on the public policy agenda. Some proponents are forgetting the lessons they should have learned years ago.  What’s that famous quotation?  “Those who do not remember the past are condemned to repeat it”

Late last year, HB 5184 was introduced in the Michigan Legislature by State Representative Mike Shirkey (R-Clarklake). His bill would fully deregulate Michigan’s electric market.

Given the supposed benefits of electric deregulation—benefits that other states have pursued without success—we thought it would be useful to help our fellow Michiganders better understand how electricity is currently regulated and why AMP believes system of responsible, common-sense regulation is the right path for us.

How is Electricity Regulated Today in Michigan?

The Michigan Public Service Commission (MPSC) is largely responsible for oversight of much of Michigan’s energy sector.  Their mission is “to grow Michigan’s economy and enhance the quality of life of its communities by assuring safe and reliable energy, telecommunications, and transportation services at reasonable rates.”  Primary MPSC duties include:

In-State Energy Providers Accountable

When a regulated Michigan energy provider falls short of expectations, it answers directly to the MPSC.   The Commission has been meticulous in this duty, and while it may occasionally seem like a burden, it ultimately makes our Michigan energy providers better and more effective at meeting Michigan’s energy needs.

Often, the MPSC and Michigan energy providers work together to plan Michigan’s energy future, drive innovation and sustainability, and ensure access, reliability, and affordability.  The MPSC, in-state providers, and policymakers helped develop Michigan’s 2008 energy policy, which has provided reasonable regulations, common-sense protections for consumers, and has driven innovation at the right pace.

Overall, the MPSC—and regulation of Michigan electric utilities industry in generalprotects Michigan consumers from price fluctuations and volatility; ensures delivery of fair, reliable energy; keeps in-state energy providers accountable; and allows for greater transparency for the public.

How Would Out-of State Providers Be Accountable?

As we’ve mentioned before, Michigan’s local regulated utilities are accountable to the MPSC in ways that out-of-state energy companies and marketers might not be.  Even though out-of-state companies would be licensed through the MPSC and some consumer protections may be put in place, state borders and spot markets pose additional challenges that leave too many questions up in the air.

Deregulation works very well for some industries, but experience in other states has shown that it doesn’t work for electricity.  Michigan should continue on the energy path that is working for us: strong oversight by the MPSC working closely with local energy providers to ensure reliable, fairly priced electricity is available to all Michiganders, and we are securing our energy future by strengthening our ability to produce our own energy.