Large manufacturers would be able to buy electricity directly from competitors of DTE Energy and Consumers Energy, under a new bill (SB 695) introduced by state Sen. Roger Victory (R-Hudsonville).
Companies with a peak electric load of 2,000 kilowatts or more would be eligible to participate in the program. The state's top two regulated utilities would have to bid against competitors if they wanted to keep supplying the electricity to manufacturers seeking to participate.
Victory said the bill was sparked by Ford Motor Company's recent decision to build a new battery electric vehicle center in Tennessee, rather than Michigan. Tennessee offered incentives and infrastructure upgrades to the automaker worth nearly $800 million, but Ford CEO Jim Farley said Tennessee's lower electricity rates were a big factor in the decision.
Rod Williamson is with ABATE, a group that advocates for policies that lower electricity rates on behalf of businesses.
He said Victory's bill would let manufacturers lower their costs and increase their usage of renewable sources of electricity. Williamson said DTE Energy and Consumers Energy are raising electricity rates faster than other states.
"And I fear that Ford won't be the last company to choose another state with lower electric rates for economic development over Michigan," Williamson said.
The new program would be in addition to the current partial competition system in Michigan, which allows retail customers to take service from an alternative electric supplier, up to a cap of no more than 10% of an electric utility's average weather-adjusted retail sales for the preceding calendar year.
DTE Energy and Consumers Energy had similar responses to the bill.
In a statement, Consumers Energy said:
Senate Bill 695 is the wrong path as it deregulates Michigan’s energy supply, jeopardizes the state’s ability to ensure reliable electric service, and disrupts our transition to a clean energy future. One only needs to look at experiences of states, such as Texas and California, that have deregulated their electric service to see the challenges in reliability and how deregulation will almost certainly result in higher-costs for Michiganders.
DTE's statement echoed those concerns:
This legislation is unnecessary and moves Michigan closer to deregulation. DTE Energy — as well as other Michigan energy companies — can be as competitive as any other jurisdiction when it comes to rates to attract new, and keep existing, large industrial companies in Michigan. A handful of states have proven again and again that deregulated energy markets do not work for customers.
Editor's note: DTE Energy and Consumers Energy are financial supporters of Michigan Radio.
