The Building Tradesman Newspaper

Friday, August 09, 2013

Trades, coalition battle new utility deregulation effort

By Marty Mulcahy, Editor



LANSING – Yet more proposed changes to Michigan’s energy policy threaten the construction of the proposed Thetford Plant, and throw into doubt all manner of pollution control work and other upgrades at Michigan’s power plants that employ building trades workers.

It seems as if the state just went through a difficult process to achieve a new energy standards and new market expectations for power regulation and the use of renewable energy sources. Well, indeed, it was only in 2008, during the Granholm Administration, that Public Acts 286 and 295 established a 10 percent renewable energy standard to be implemented by 2015 for the state’s utilities. The new law also provided market stability for the state’s utilities, limiting electrical deregulation to 10 percent of customers. A bipartisan effort among unions, industries and the state’s utilities led to the agreement, which was seen as a fair path forward for utilities and customers.

Now, a free-market group called the Customer Choice Coalition is seeking to eliminate that 10 percent restriction, allowing utility customers to choose from any power provider on the market. Established utilities like Consumers Energy and Detroit Edison maintain that complete deregulation of power unfairly allows customers to pick and choose from open market providers of electricity, while the legacy utilities who have built power plants and distribution lines are stuck with those maintenance costs, without hope of recouping their investment.

“Five years ago, I thought we had a good balanced plan put together. All the needs were met for environmental purposes, new clean coal technology and a good balanced plan for the state of Michigan,” said Patrick “Shorty” Gleason, legislative director for the Michigan Building and Construction Trades Council. “I’m afraid that they’re going to open up the complete energy policy which will change everything. Now if that should happen and choice is wide open to the users in this state, what’s going to happen is the Thetford plant is probably going to be cancelled and it’s going to be a loss of local jobs and thousands of construction jobs in the state of Michigan. And who knows how many power plants will be shut down if we start bringing in power from surrounding states rather than generating it here in our own state.”

Gleason was speaking in a video sponsored by the Michigan Jobs and Energy Coalition, which includes Detroit Edison and Consumers Energy as well as the Michigan Chamber of Commerce and the Michigan Manufacturers Association. The group says Michigan’s electric power industry represented $11.7 billion in direct investment in 2010, and that the state’s existing comprehensive energy law “is one of the most successful policies in the country.” For more information, go to www.michiganjobsandenergy.com.

This spring, the state House Energy and Technology Committee heard testimony about the pros and cons of removing the 10 percent cap on customer utility choice. Proponents like former state Public Service Commissioner Laura Chappelle said Michigan has higher electrical rates that make it tougher to attract new business. Other testimony, according to Midwest Energy News, said the 10 percent cap means Michigan customers are paying rates about 20 percent higher than market rates, amounting to $1.8 billion in extra costs.

However, former PSC Commissioner Steve Transeth, the Energy Policy Director of the Michigan Jobs and Energy Coalition, told Midwest Energy News those numbers don’t tell the whole story. “A review of the history of rates over the last 20 years clearly demonstrates that deregulation has failed to deliver lower prices,” he said. “The rate differential between regulated and deregulated states is the same today as it was in 1990. Electricity is an essential service and we must never let it become a speculative commodity.”

The big fear in the building trades, who service the state’s power plants, and business groups who rely on a reliable source of energy, is that deregulation will lead to Detroit Edison, Consumers Energy and other big, local utilities to shutter their baseload and other power plants. Power would then be generated and imported from out of state.