Like many states across the nation, Michigan’s electricity market started the process of electric deregulation in the early 2000s, allowing retail electricity providers to compete for electric supply customers. Yet, while other states have completed their deregulation process, Michigan is unique in that only a select number of customers are able to participate in electric choice.
Under an energy-reform law of 2008, Michigan electric utilities are only able to honor switching requests from residential and small business customers if no more than 10% of the utility’s average weather adjusted retail sales from the previous year were accounted for by shopping customers.
If the utility has reached its cap, customers are placed on a waiting list, or queue. The two smaller utilities of Michigan’s main four, Indiana Michigan Power and Upper Peninsula Power Company, currently have no customers in queue. Detroit Edison and Consumers Energy, on the other hand, have thousands of customers who are waiting to make the switch.
As of February 13, there were 5,885 residential and small business customers in queue for Consumers Energy and 4,645 in queue under Detroit Edison. This is in comparison to 3,739 and 2,646 in 2011 and 1,714 and 1,100 in 2010, respectively. While the utilities don’t publish the exact number of customers that have already switched, it can be estimated at over 6,000 for Consumers Energy and about 5,000 for Detroit Edison, according to non-cap adjusted participation percentage numbers in Michigan Public Services Commission’s 2012 Status of Electric Competition report.
If there were no caps, about 24% of Consumers Energy customers and about 20.5% of Detroit Edison’s customers would be participating in electric choice, up from 14% and 11.4% in 2010, respectively.
Dan Bishop, a Consumers Energy spokesman, stated that the 10% cap has allowed the utility to invest more in clean energy programs and reliability programs, but critics have warned that the caps have prevented electricity prices from lowering because of the lack of competition.
There are 26 licensed retail electricity providers in the state of Michigan. It’s assumed that many of these providers are ready to undercut their biggest competition – Detroit Edison and Consumers Energy – by providing lower electric rates to non-shopping customers.