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Nesbitt’s Energy Plan Moves Away From Electric Choice

March 10, 2015

Michigan would return to a fully regulated electric market — and away from electric choice — in a sweeping energy policy plan announced Thursday afternoon from the House Energy Policy Committee chair.

The proposed move, presented by Rep. Aric Nesbitt (R-Lawton), was heralded as a way to return to more reliability and lower electric rates, he said.

That would mean Michigan would move away from the 10 percent electric choice cap, although that transition would happen gradually, depending on the individual short-term and long-term contracts already in place, Nesbitt said.

“When those contracts are ended, they’d be fully back into the regulated utility,” Nesbitt said.

The plan also would not explicitly call for a higher renewable portfolio standard (RPS). Nesbitt said if nothing else happens, the RPS would remain at 10 percent, which utilities are expected to reach by the end of the year.

Nesbitt argued his plan would move the state away from renewable energy mandates. Nesbitt is proposing that utilities be required to file five-year integrated resource plans with the state that would incorporate efficiency and renewable energy aspects, as well as other elements.

“In terms of part of the overall planning of the integrated resource plan, you should be looking at an all-of-the-above energy approach and whatever is the most cost effective to meet that, should be looked at and gone through,” Nesbitt said.

Nesbitt’s announcement comes after the House Democrats released their ideas earlier this week.

When asked about the release of the Dems’ plan, Nesbitt quipped the minority caucus “came out with a press release,” but he didn’t exactly rule out working with some of their ideas.

Both sides, for instance, put some emphasis on bolstering ratepayer advocacy during utility-related cases before the state.

Nesbitt’s plan also comes weeks before Gov. Rick SNYDER is expected to deliver a special message on energy policy. Senate Energy and Technology Committee Chair Mike NOFS (R-Battle Creek) and the Republican caucus are also expected to contribute to the energy policy debate this year.

Nofs said he plans on bringing back his 30-some member workgroup on this issue next week. His tentative plan is to have the framework of legislation ready after the spring recess. The Senate chair was given a briefing of Nesbitt’s plan earlier today. When asked how much of it he agreed with, Nofs said, “60 percent.”

The state’s dominant utilities — DTE Energy and Consumers Energy — have long warned against electric choice, and have said choice customers could be negatively impacted by a projected energy shortfall.

The utilities have amped up a public relations campaign to influence the energy policy debate this year.

Nesbitt said, “I’m sure the utilities will like some aspects and not like some aspects of this plan.” The utilities’ initial statements today were receptive to the direction he was taking.

“The evidence and historical record is clear that customers benefit most from the fairness, stability, affordability and investment provided by full state regulation,” said Dan BISHOP, spokesperson for Consumers. “We are pleased that House Chairman Aric Nesbitt has recognized this in his proposals.”

DTE Energy also appeared receptive in its statement.

“We see this as a great opportunity for continued growth and prosperity for Michigan’s families and businesses and we look forward to working with the Legislature as it continues discussions on how to secure an affordable, reliable and increasingly clean energy future,” said Scott SIMONS, spokesperson for DTE. “Chairman Nesbitt’s bill introduces a framework that does that.”

Nesbitt’s proposition attracted plenty of reactions from all over today.

Energy Choice Now claimed the proposal would raise Michiganders’ rates “by billions.” The Michigan Freedom Fund also protested the idea of abandoning electric choice, urging people to sign a petition to “tell lawmakers and Big Energy that the free market works. Tell them the time has come to bring electric choice and economic freedom back to Michigan!”

Nesbitt said other states have tried going to a retail market only to move back to a regulated one. He said the competitive market works for other industries, but not electricity.

“Those markets lend itself to a natural monopoly,” he said.

Nesbitt said taking the state back to a regulated market would result in a four-to-five percent savings on electricity rates. He projected an overall five-to-seven percent savings on rates from the overall plan.

“I’m still digging into those, but I think those would be legitimate numbers,” Nesbitt said. 

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