Michigan Utilities Gear up for DM But Efforts Are Put on Hold

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Two electric utilities in Michigan have decided to offer choice to their customers under guidelines of the Michigan Public Service Commission's electric restructuring plan. The action comes after a State Supreme Court ruling on June 29, which made implementation of customer choice a voluntary action.


Both Consumers Energy, a subsidiary of CMS Energy, Jackson, MI, and Detroit Edison are gearing up to begin marketing to customers; but because several state bills are pending, their programs are currently on hold.


According to the MPSC plan, restructuring will begin in September with 2 percent of utility companies being offered for choice. Another 2 percent of utilities' customers will be added in January and again in March 2000. By Jan. 1, 2002, the entire electric market will be open.


"We believe that the approach to electric restructuring embodied in the MPSC rulings of the past three years is fair and balanced," said Consumers Energy's president/CEO David W. Joos.


"We are contacting our customers through inserts in their billing statements right now," said Lew Layton, a spokesman for Detroit Edison, which serves 2 million households. "That is the extent of what we are doing for this year because of the gradual implementation of the program. The inserts will say what choice is all about and how it benefits the customer."


Consumers Energy, likewise, would not disclose its planned direct marketing efforts. The company is currently informing its customers of its choice program through news media and town meetings.


"We will be beginning this fall to contact our customers directly on choice, but we don't know through what means." said Consumers Energy spokesman Dan Bishop.


Since the Michigan Supreme Court ruled that the MPSC does not have the authority to restructure the state's electric utilities, several deregulation bills have been introduced in the both houses of the state legislature.


With the legislature recessed until the fall session, both Consumers Energy and Detroit Edison are lobbying for House Bill 4725, which would make the MPSC plan of deregulation law in the same time frame.


The Michigan State Chamber of Commerce, is supporting a series of six bills, House Bills 4789 through 4791, plus Senate Bills 642 through 644. These bills would alter the MPSC guidelines by making open markets immediate and breaking up the utilities into electricity suppliers and service providers.


"We support another bill in the Michigan House that would codify the MPSC plan," Bishop said. "What the chamber is supporting is a separate series of bills."


In a prepared statement, Consumers Energy officials called the legislation being supported by the Chamber of Commerce "not a productive step in the restructuring process."


One of the key differences between HB 4725 and the package of six bills is that the Consumers Energy and Detroit Edison, the largest utilities in the state, would have to separate themselves into competitive and noncompetitive divisions.


"This legislation targets the two largest electric utilities in Michigan while incorporating substantial exemptions for the rest," Consumers Energy said in its statement. "It would effectively force the breakup of Consumers Energy and Detroit Edison, while leaving other utilities and other large integrated energy supply companies in tact. It is technically naïve because Consumers Energy and Detroit Edison would still be held responsible for electric reliability in Michigan, but would be completely unable to ensure that reliability because of the forced breakup."


The Michigan Chamber of Commerce is promoting the six-bill package because it permanently lowers rates, it said, while at the same time provides new consumer protection and ensures increased reliability for state residents.


The Chamber of Commerce also cited a report from the U.S. Energy Information Agency, a division of the U.S. Department of Energy, which found the neighboring states of Illinois and Ohio, having restructured, have lowered prices, making Michigan's electric rates the highest of the Midwestern States.


"We should not have the highest cost for power in the region," said Jim Barrett, Chamber of Commerce president/CEO. "The enactment of workable electric restructuring legislation will only occur when all the stakeholders -- residential customers, businesses and utilities -- engage in an open debate on the issues. This legislation provides the framework for a compromise that will benefit all of the interested parties."


The bills that have been introduced are under consideration through the two-year session. The package of six bills would need passage as a package to be effective.
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