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Wed August 22, 2012
As electric bills rise, critics call for more competition
Maybe you've seen a note on your electric bill, saying some of your payment goes towards green energy initiatives. It's to help explain - and, just maybe, stave off frustration about - double-digit increases in the last few years.
But green energy aside, all these rising rates have some out-of-state electric companies seeing a business opportunity. They’ve joined with several Michigan businesses to form the group Energy Choice Now, which put out a new study out this week.
The study says high rates are hurting Michigan’s economy, and hey, here’s a convenient solution: why not let more companies get into Michigan’s utilities market? Say, for example, some of the companies behind Energy Choice Now?
Ok, the study doesn’t recommend specific electric companies, but you can see how it’s all connected. They do have a point: just two companies, DTE and Consumers Energy, have a lock on 90% of Michigan’s electric customers.
That’s because in 2008, they made a deal with the state: in exchange for a hold on the market, DTE and Consumers Energy would make 10% of their energy renewable by 2015. So new wind farms, solar panels – it’s all expensive stuff. That’s part of the reason behind the rate hikes, according to DTE and Consumers.
But green energy investments may not be worth drastically higher utilities, according to Energy Choice Now. Jonathan Lesser conducted their study.
He says other states, such as Rhode Island, have already come to that conclusion. "Look, it's basic economics. If you increase the cost of electricity, whether it's for green energy or not, you're gonna lose business. That's gonna be bad for the Michigan economy."
Michigan’s rates are higher than the national average, but they're certainly not the highest. Nonetheless, Lesser says Michigan customers are paying much more than many of their Midwestern neighbors. "The problem with Michigan, is that it's going up rapidly. That since competition was restricted, rates have gone up quite a lot."
DTE and Consumers Energy say if the market opens up, they could lose customers to competitors, and then they can't afford to invest in green energy. And they say their remaining customers would bear a higher cost of the green energy initiatives – with fewer people to share the burden, remaining DTE and Consumer customers would be footing a much bigger bill.