LANSING – Sen. Ken Horn has introduced legislation that will effectively eliminate the option of Michigan customers of a major utility company such as DTE Energy or Consumers Energy switching to an alternative electric supplier, though those who are currently using an alternative supplier would have the option to say with them.
Under current law, 10 percent of the electric supply market is permitted to use alternative electric suppliers. That law is up for debate, as many of its provisions are set to expire by the end of the year.
A provision of law allowing all retail customers to “have a choice of electric suppliers” is struck under SB 247 , and with it goes oversight of an AES by the Public Service Commission. Inserted into the bill instead is language mandating that customers of electric utilities are “not eligible to receive generation from an alternative electric supplier” as of the effective date of the act.
Those who are currently with an AES at the time of enactment may switch to an incumbent utility under the bill, but if they do, the bill requires the customer to provide five years’ written notice of the intent to return. Electric utilities would have sole discretion to waive that notice.
“To bring certainty to the planning process, our utilities need to know who their customers are,” Horn (R-Frankenmuth) said. “It says to the choice customers, if you come back, you have to give five years notice.”
The choice issue has been a divisive one not only in the lobbying community but between legislators and Governor Rick Snyder, the latter recently proposing in his energy plan to keep the 10 percent cap under certain circumstances in any future energy law reform. The majority of the Senate Energy and Technology Committee seem to agree that choice should be eliminated, and Rep. Aric Nesbitt (R-Lawton), chair of the House Energy Committee, isn’t thrilled about choice, either.
Horn said his bill would eliminate the queue while allowing people currently on choice to stay there, “but it becomes a true choice.”
“What my bill does is it gives certainty to all energy suppliers, ultimately including alternative electric suppliers, who will have to ensure their customer also have a five-year projection,” he said. “My bill protects the average homeowner and the average supplier who uses electricity from higher prices and customer that have chosen to walk away and come back.”
Asked about the kind of strain a five-year notice would have on an ordinary residential customer, Horn said he is unaware of any such customers using alternative electric suppliers. Indeed, Judy Palnau with the Public Service Commission said AESs in Michigan have marketed their services to businesses and that the annual PSC electric choice report even notes “the number of residential choice customers participating in the electric choice program is negligible.”
“When we deregulated PA 141, we completely opened up the electric market, and from that period through 2008, not one residential customer was offered that service because it’s so hard to service that residential customer,” Horn noted.
Instead, he charged, alternative suppliers “cherry-pick” easy customers who use a lot of electricity, making his legislation especially important in terms of stability.
Horn said his bill will likely be one several ideas that Sen. Mike Nofs (R-Battle Creek), chair of the Senate committee, and his energy work group could consider as talks continue on how best to move forward with a new energy law. Nofs did not immediately return a call for comment on the bill.
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