Consumers Energy plans to build a $2 billion addition to the Karn-Weadock plant at the mouth of the Saginaw River. (Photo courtesy of boatnerd.com) What's Up With the Republicans in Lansing Dragging Feet on Electric Plan?
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Bay County's economic future is dependent partly on approval for Consumers Energy to build a $2 billion addition to the Karn-Weadock plant at the mouth of the Saginaw River.
The huge boost that would come from seven years of construction by more than 1,000 workers, plus the additional jobs in the plant, are seen as critical to economic development efforts here.
A report by Public Sector Consultants on electric market structures said re-regulation is the only way to meet recommendations of the state's 21st Century Energy Plan. The plan calls for a new $500 MW plant (presumably the Karn-Weadock addition) and conservation and renewable energy efforts equivalent to 1,000 megawatts.
But the plan is mired in politics and bureaucratic red tape in Lansing as well as cross currents of business and industry positioning.
Consumers has stated flatly it can't go forward with the new plant unless the Electric Choice program is shelved or modified. Without that change, Consumers says it can't promise lenders a secure customer base.
The Electric Choice program, Public Act 141, was adopted during the John Engler administration but has proven to be, as some critics charge, "competition for competition's sake."
It didn't save much money for customers who have not flocked to sign up. Only 4,800 customers are currently in the plan, a one third drop in a year, the Michigan Public Service commission reported last week.
With 28 alternative providers, the average of 170 customers each proves that this program not only has little appeal it is holding up progress in providing adequate power to meet Michigan's needs.
I guess the opposition by Atty. Gen. Mike Cox is understandable since he is running for governor and is trying to position himself as a populist.
But it would seem that the economic development hopes of the tri-county region of about 400,000 population would far outweigh the political effect of backing a program with only 4,800 customers whose benefit from it is highly suspect.
Mr. Cox could be better served by positioning himself as a champion of economic development rather than riding a horse that was dead before John Engler left office nearly a decade ago.
Although Republicans would be expected to support a re-regulation scheme by the Michigan Manufacturers Association, the Big Three automakers and the state's two major electric utilities, the GOP so far has shown little enthusiasm for the change.
Neither have the Democrats taken a hard-charging leadership role despite the importance of the issue to the job picture in the tri-county region. To be fair, State Rep. Jeff Mayes and State Sen. Jim Barcia backed the plan strongly when the local plant was announced last fall.
Dow Chemical also was reported iffy on the idea, maybe because LS Power is building a 750 megawatt plant in Midland. Perhaps Dow is hedging its bets to make sure enough power is available for the Hemlock Semiconductor plant and the Midland chemical complex.
One major target for any increased power production is the new $500 million addition to the Dow Corning semiconductor plant in Hemlock, a big user of energy with potential for even more expansion.
A one-third drop in the number of electric choice customers in Michigan was reported by the Michigan Public Service Commission last week.
During 2007, the PSC reported, the electric choice program in the Consumers Energy Company territory experienced a five (5) percent annual increase in electric megawatt (MW) load. Conversely, the electric choice program in The Detroit Edison Company territory saw a 20 percent annual MW load decline. This decline in electric choice in Detroit Edison's service territory was attributed, in part, to higher wholesale electricity prices and some uncertainty of changes to PA 141.
Michigan is one of about 20 States that has a competitive electric market. In comparison to other electric choice states, Michigan's average retail electricity price ranked sixth and seventh in 2007, based on customer class. If compared to the ten largest U.S. states, Michigan was benchmarked as having the fourth lowest average retail electricity rates for residential and industrial customers and the third lowest for commercial customers. The report shows that since 2000 the relative ranking of Michigan's utility rates for residential, commercial, and industrial customer classes, as compared to other states, have all improved.
But what good are relatively low rates if there is not enough supply?And it seems that additional supply in the tri-county area at least depends on building additional generating capacity.
In 2007, the Commission issued 38 orders to further establish the framework for Michigan's electric customer choice programs and implement the provisions of PA 141.
The PSC has taken no position on the proposed revision of PA 141 and PSC Chairman Orjiakor Isiogu says only that the agency supports "efficient standards" while it seeks more oversight on mergers and acquisitions.
Highlights of the report include:
Approximately 4,800 commercial and industrial customers in Detroit Edison Company and Consumers Energy Company service territories participated in Michigan's electric customer choice programs.
About four percent of electricity sales in Detroit Edison and Consumers Energy service areas were supplied by Alternative Electric Suppliers (AESs), down from about six percent in 2006.
There were 28 licensed AESs in Michigan throughout 2007. Electric standards were developed for interconnections between independent power producers and public utilities.
For the first time in 10 years, Consumer Standards and Billing Practices for electric and gas service were significantly revised.
The Low-Income and Energy Efficiency Fund grants awarded $72 million for low-income financial assistance and $20 million for low-income energy efficiency.
Almost 12,000 customers participate in Consumer Energy's Green Generation pricing program; and over 6,800 in Detroit Edison's GreenCurrents program. In addition, Constellation NewEnergy, a licensed AES, continued to offer a new "Green-e Renewable Energy" product. Spartan Energy LLC, a licensed AES, allowed customers to pay a premium for renewable energy power.
The Commission supports legislation to promote effective energy efficiency programs for utility customers and to establish a renewable portfolio standard to increase the percentage of electricity in Michigan that is generated by renewable resources.
The Customer Choice Program activity is incorporated in the specific utility charts updated monthly for Consumers Energy and Detroit Edison. The charts shows cumulative number of customers, MW, enrolled and in-service on an eighteen month rolling forward basis. The most current monthly information is listed in the last column of each chart.
Comments or questions on these reports may be directed to:
Sharon Theroux, Regulated Energy Division, Michigan Public Service Commission, P.O. Box 30221,Lansing, Michigan 48909,slthero@michigan.gov, (517) 241-6192###
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