State Representative Mike Shirkey introduced a bill recently that seeks to end the current common-sense policy that limits electric market deregulation in Michigan to 10 percent of the marketplace. House Bill 5184 would move Michigan to full deregulation. It’s a move that has proven disastrous in Montana and several other states.
Representative Shirkey’s intentions may be good, as he believes full deregulation will increase competition and save money—but the facts prove otherwise. Prior to 2008, when the current 10% cap was initiated by the Legislature with overwhelming bipartisan majorities, Michigan’s Electric Choice Program was not capped. That experience with deregulation did not produce the outcomes Rep. Shirkey has described. The 2008 energy law was in direct response to this failure.
Current Policy Limiting the Scope of Deregulation Benefits Michigan
First of all, the competitive marketplace the Representative speaks of would simply allow out-of-state energy providers to use Michigan’s energy infrastructure to reach Michigan customers, only to take the economic benefits back out of our state. That money should stay here to support Michigan jobs.
Moreover, the savings of the projects are little more than a case of robbing Peter to pay Paul. Even under the present 10 percent limit on deregulation, 99.9 percent of Michigan’s families and businesses are paying $300 million more to properly maintain Michigan’s electric system so that 0.1 percent can pay less. This is simply unfair and it will only get worse if HB 5184 is adopted. We know that statewide, each 5 percent increase in deregulation costs Michigan families and businesses an additional $150 million.
Learning from the Past
Legislators in Lansing should be mindful of the numerous cautionary examples of efforts to deregulate electric markets. The residents of Montana ended up with “one of the worst public policy decisions ever made” when their state went all-in on electric deregulation. That’s just the latest debacle; one of the most famous collapses caused by deregulation occurred in California, which former governor Gray Davis called “a colossal and dangerous failure.” Deregulation may sound good in theory, but in practice it has repeatedly failed to lower rates, has often caused them to increase dramatically, and has also put reliability at risk.
Michigan’s Energy Future
Local energy is a key part of tackling the various economic challenges Michigan faces. Deregulation— especially on such a massive scale as Representative Shirkey’s legislation proposes—would likely result in large price swings and other economic problems. Such unpredictability will cause investors to shy away from investing in Michigan’s energy infrastructure, which means it will become even more difficult for us to produce our own energy or continue to move Michigan toward a more sustainable future.
Michigan’s economy is finally on the rebound. This is no time to make such a radical change to state policies affecting something as critical as safe, reliable, affordable electric service.
AMP believes energy produced by Michiganders for Michiganders is a smarter path to a bright future for everyone who lives and works here.
We’ll soon be inviting you to contact your legislators and ask them to protect Michigan’s energy future by voting against Representative Shirkey’s misguided bill.