Thursday, July 8, 2004

6 bills would help big Michigan utilities

Proposals would change electricity rates charged returning clients in '06

Associated Press

LANSING — Big utilities would benefit from legislation that would require customers who buy electricity from alternate providers to pay market, not regulated, rates if they go back to those utilities beginning in 2006.

The package of six bills would change Michigan’s newly deregulated electric industry.

The state’s two largest utilities — Consumers Energy and Detroit Edison — have said they’re losing money as commercial and industrial customers go to alternate providers for their electricity.

The legislation would continue to allow customers to switch back and forth between electric suppliers, but they would have to pay market rates upon their return after Dec. 31, 2005. If they go back to the large utility before then, they can receive the regulated rate.

The provision is intended to prevent the large utilities from having to store electricity in case industrial or commercial customers return from other providers.

The bills also would require that all utilities and alternate providers maintain 15 percent reserve capacity.

Detroit Edison and Jackson-based Consumers Energy have said they maintain reserves of 10 percent to 15 percent to back up service in case problems arise.

A coalition of businesses and advocacy groups called Citizens for Long-term Energy Affordability and Reliability, or CLEAR, said it’s unfair that alternate electricity providers maintain just a 4 percent reserve margin.

DTE Energy Co. is the parent company of Detroit Edison and a member of CLEAR coalition. Utility officials were reviewing the legislation Thursday night and could not say if they fully support it.

“I think it’s a step forward in creating a fair and level playing field in Michigan,” said DTE Energy Co. President Gerry Anderson.

A spokesman for a group of small businesses, retailers and government units criticized the package of bills.

David Waymire, with the Association of Businesses Advocating Tariff Equity, or ABATE, said the legislation would threaten the reliability of the state’s electric system and create job losses in the manufacturing and service sectors.

Waymire said the legislation would force manufacturers to pay higher rates. He said DTE’s manufacturing rate is 40 percent higher than the average manufacturing rate in Indiana.