Michigan suffering under constrained customer choice

Many Michigan state legislators are content with the state's current electricity market, but the Jackson Citizen Patriot argues that Michigan's attempt at electricity deregulation has proven incoherent.

Michigan has had a difficult relationship with electricity deregulation because of the strong limits that the state chose to put on competition when it first passed the law in 2000. Like many states, Michigan was concerned about rapidly rising electricity rates and hoped to curtail such a spike by only allowing 10 percent of residents to switch electricity providers.

The Citizen Patriot argues, however, that this system unfairly "picks winners and losers" within the state. While for residents this can mean some people save money compared to their neighbors, which can prove frustrating for those on the losing end of that deal, for businesses that cannot secure access to the program it can mean the difference between making a profit and closing up shop.

The Michigan Department of Licensing and Regulatory Affairs reports that Customer Choice Programs through Consumers Energy and Detroit Edison Electric are allowed to offer around 1,250 megawatts and around 800 megawatts power through competitive electricity providers.

As of October 2011, Consumers Energy listed nearly double the allowed capacity – more than 1,500 megawatts. Over the past year, the number of customers served by the program has remained nearly unchanged from between 1,070 and 1,080. Yet, more than four times the allowed customers have enrolled for Consumer's program – more than 4,300 as of October.

Detroit Edison has seen a less dramatic difference, but still has higher enrollment than is currently allowed. At the greatest gap in April of this year, DTE Energy saw 1,310 megawatts of enrolled capacity, with only 1,230 megawatts of capacity served.

Through July of this year, the U.S. Energy Information Administration reports that Michigan's electricity rates were not too far out of line with those of the country as a whole. Averaging 10.48 cents per kilowatt-hour, the state pays only 4 percent above the national average, though that is up from 2 percent above the national average the year before.

That difference grows substantially when looking at that region of the Midwest. Michigan pays 13 percent more than the EIA's East North Central region, including Illinois, Indiana, Michigan, Ohio and Wisconsin. Industrial consumers were the worst hit among this group, paying 14 percent above the regional average, as well as 8 percent above the national average.