Senate Energy Bill 437

by David Sheldon

The Michigan Senate Energy Committee will be holding a public hearing on this proposed energy bill Thursday September 17th at 12:30 pm in the Senate Hearing Room, Ground Floor, Boji Tower, 124 W. Allegan Street, Lansing.

There have been emails circulating among some of the smart meter resisters suggesting it will be the end of the world as we know it if this bill were to pass. We think otherwise. Claims are being made that passage of this bill will end energy competition in this state. Claims are even being made that passage of this bill will somehow usher us into a communist dictatorship or into fascism. To be sure this nation that we love is on a dangerous path toward tyranny for many reasons but mostly having nothing to do with the bill that will be heard tomorrow.

The first thing to understand is that this bill will NOT stamp out the small electric companies, coop utilities and municipal utilities that serve some areas of the state. These utilities enjoy an absolute monopoly in each of their respective service areas under present law and would continue to do so if the bill were to pass.

The next thing to understand is that, within the areas served by DTE Energy and by Consumers Energy, there is nothing like a free market now. This is because the alternative energy suppliers are limited by law to serving only 10% of the market, and they have been at their limit for some time. The so called “energy choice” law now on the books is providing a benefit to only a few large users of electricity that were grand fathered in. There is little or no opportunity for the average residential customer to choose an alternative electric supplier. Just ask yourselves when was the last time you saw an ad from an alternative electric supplier seeking your business? Entry to this program is so restricted that there is a waiting list for people who want to switch to an alternative supplier. How on earth does such a system put any competitive pressure on DTE or Consumers? Even those customers who signed with an alternative supplier when the gate was still open find that their electricity must reach them through the electric distribution systems of either DTE or Consumers and be metered by a DTE or Consumers smart meter.

Senate Bill 437 is a complicated piece of proposed legislation. It does many other things unrelated to energy competition. It makes changes to how the utilities can get rate increases through. It defines procedures for something called “integrated resource planning”. But with respect to alternative electric suppliers it seeks to chip away at the 10% of the market they now enjoy by imposing complex new rules. The new rules allow those who are already benefiting from the program to continue benefiting so long as they maintain continuity of service with the alternative provider. The new rules bar the door to any new customers joining the program unless they are already on a waiting list.

We are right to be suspicious of such a bill as an effort by the monopoly utilities to increase their revenues. We have a concern that the frantic emails now circulating among smart meter resisters will result in some people going to speak at the hearing against this bill while being unclear what the bill is and does. Mainly it is a contest between two large utility monopolies on one side vs. vested interests that are now benefitting from a so called “choice” program.

So is it much ado about nothing? Not entirely, but it is about much less than some are claiming.

A concise summary of the bill can be read here.