“It’s difficult to understand how a company can come to Lansing and argue against competition – then turn around and sell electricity in the competitive markets in Ohio and New Jersey,” said Wayne Kuipers, executive director of Energy Choice Now, a large coalition of Michigan businesses and energy suppliers who support bringing competitive electricity to Michigan by removing the current 10 percent cap on competition.

“DTE Michigan customers are essentially subsidizing Ohio customers by paying DTE more for their electricity than Ohio consumers are paying DTE for electricity.  And with the 10 percent cap in place, DTE won’t allow its Michigancustomers to shop for lower prices that are readily available in the market. Many Michigan customers are outraged by DTE’s rate hikes. This is adding insult to injury.”

Data released on February 16, 2012 by the Public Utilities Commission of Ohio, show that DTE bid to provide power in Toledo and other areas of Ohio for the equivalent of about a 5.10 cents per kilowatt hour average rate.  InDetroit, the equivalent average rate just for electricity, excluding distribution and basic service charges, is about 7.00 cents per kilowatt hour — an increase of 37 percent for Michigan customers!

Ohio has a competitive electric market and relies upon competitive wholesale and retail markets to meet their energy needs. Michigan’s law restricts competition to 10 percent of the electric market – an amount that has been totally filled since 2009. Today, more than 7,000 companies are in line trying to get away from DTE and Consumers Energy, the other major utility in the state, both of whom were granted monopoly status in 2008. In just 18 months, the line of Michigan companies wanting relief from utility rate hikes has exploded by 600 percent. Yet in recent testimony before the Legislature, DTE officials argued that competition would be bad for customers.

In Ohio, DTE is choosing to participate in a competitive electric market – and contrary to DTE statements inLansing,Ohio customers are reaping the benefits.  Residential customers have increasingly enjoyed lower electric rates – while Michigan’s families have been seeing rates skyrocket. In Toledo, according to the Public Utility Commission of Ohio, the average family using 750 kilowatt hours of power saw its bill decrease 4.8 percent from $102.37 in July 2008 to $97.43 in November, 2011 – an annual savings of $59.28.

Meanwhile, frugal Detroit families using 250 kwh/month have seen their rates increase by 62.6 percent since DTE fought to eliminate competition in Michigan (2008.)

As a result of their annual electricity auction, the New Jersey Board of Public Utilities proudly points to reduced electricity prices across all sectors of the state, from residents to businesses. For NJ residents, electric competition is expected to reduce the costs ranging from 6.4% to 1%.  And DTE helped make that happen.

“Lawmakers need to take a close look at what Michigan’s utilities tell them about competition and what the facts show,” Kuipers said. “DTE clearly supports competition and participates in the competitive markets outside ofMichiganbut opposes competition inMichiganto the detriment ofMichiganresidents and the Michigan economy.”

DTE electric rate increases from 2008 to today:

Prices in cents per kilowatt hour

Meanwhile, the line of customers trying to escape the high rates charged by Consumers Energy and Detroit Edison and shop for power continues to grow. In the last month, nearly 1,000 more customers fed up with the state’s pro-monopoly electric law applied to leave the utilities, pushing the number of companies asking to leave to nearly 7,000. And this week, the two major utilities announced they will continue to deny those companies the opportunity to choose.

Public Act 286 of 2008 put a 10 percent “cap” on electric choice in Michigan – a move that dramatically raised electric rates in the state to the highest in the Midwest, and well above the national average. Today Michigan business and government customers are paying $1 billion more for electricity than if our electric rates were at the regional average, hindering the retention and creation of jobs in Michigan.

The law picks winners and losers, giving a major competitive advantage to those able to escape the sky-high rates of the major utilities.

That’s why Energy Choice Now and the Customer Choice Coalition are fighting to increase the 10 percent cap and end the energy monopoly in Michigan.

“Right now there’s virtually no energy competition in Michigan – only a few winners who have been picked by the state, and a whole lot of losers,” said Wayne Kuipers, executive director of Energy Choice Now. “Michigan’s current energy policy is not fair – not fair to businesses trying to compete, and not fair to consumers trying to keep their heads above water in a tough economy. Raising the cap is the only way to bring true energy relief to our state.”

Kuipers noted that Michigan’s rates have increased more than any other Midwest state since 2008, when the new law was passed. Meanwhile, Ohio and Illinois, the region’s states with the most electric competition, have seen rates increase the least.

You can read the MPSC’s report here.

“This is only the formal burial of a plan that was hatched in 2007 to manipulate the Legislature and Gov. Granholm into killing competition and choice and restoring monopoly power to our two major utilities.

“CCC provided factual data and statements in 2008 showing that this plant was not needed, but Consumers continued to tell lawmakers that it was — but then backed off construction ‘plans’ as soon as it was handed monopoly power.

“Thanks to the 2008 law passed due to the misleading information provided policymakers by Consumers Energy, Michigan today has the highest electric rates in the Midwest, and rates well above the national average. Meanwhile states with competition — Illinois and Ohio — have seen rates decrease over the last year, and competition works. Michigan commercial and industrial customers are paying $1 billion annually above the Midwest average for electricity, according to the U.S. Energy Information Administration figures.

“Now it’s time for the Legislature to go back and restore full competition to Michigan, to improve our state’s economy by lowering electric rates.”

The Customer Choice Coalition is a group of associations, businesses, alternative energy suppliers, individuals and other organizations supporting the ability of customers to choose from many electric providers when purchasing energy.

A series of videos – featuring business owners forced to purchase their electricity from Consumers and DTE, alternate energy providers and former State Sen. Wayne Kuipers – is available for viewing at YouTube.com/micustomerchoice.

The videos were filmed shortly prior to a recent hearing of the Senate Energy and Technology committee on the impact of PA 286 of 2008, Michigan’s energy law. PA286 capped electric competition at 10 percent. In addition to keeping rates high by stifling competition, this effectively means Michigan is choosing winners and losers when it comes to energy rates.

Bill Zehnder, who owns the Bavarian Inn in Frankenmuth, did not make it under the cap. His cousins, who operate Zehnder’s Restaurant just north of the Bavarian Inn, did.

“We’re right across the street from each other, and they’re saving tens of thousands of dollars a year on electric rates,” Zehnder said. “I have no choice – and that’s why this legislation is so important.”

Jonas McCluskey, president of the Elm Plating Company in Jackson, said it’s getting harder and harder to do business in Michigan. Elm Plating is a family-owned plating, anodizing, and heat treating business that has been based in the state for nearly 65 years.

“If electrical rates continue to climb at the rate they have the last few years, we would have to take a serious look at moving the business elsewhere,” McCluskey said.

Kuipers, the executive director of Energy Choice Now, a coalition of companies pushing for electric competition to lower rates, called on the Michigan Legislature to raise the 10 percent cap.

“Create a climate in Michigan that is open to competition,” he said. “Allow them access to the choice market so they have the ability compete not only across the country, but across the world.”

Mark Butler — Vice President Finance and Administration, Campbell Grinder
Jonas McCluskey — President, Elm Plating Company
Bill Zehnder — President, Frankenmuth Bavarian Inn
Steve Elsea — Director of Energy Services, Leggett and Platt

“You as legislators are concerned about improving Michigan’s economy. This electricity choice issue is an opportunity to do just that,” said William A. (Bill) Zehnder, president, Frankenmuth Bavarian Inn, Inc., who spoke to the tremendous difficultly and demands facing Michigan’s Hotel and Restaurant business, specifically: rising utility costs.

“Obviously it has not been easy laying off staff, cutting insurance benefits and paying rising costs for insurances, utilities, and of course all of our cost of good’s categories.  We ARE in SURVIVAL mode. Please assist other Michigan companies by giving them a CHOICE. The benefit to our great State of Michigan will be significant reinvestment by thousands of businesses and thus growth in employment and opportunity. My business would love to reinvest with the potential savings – to buy more equipment, upgrade our facilities, hire more team members, pay more in wages and benefits, and buy more Michigan products.”

The hearing coincided with a number of important developments:

·         The most recent data released by the U.S. Energy Information Administration showing Michigan’s job-killing electric rates continue to be the highest in the Midwest and well above the national average.

·         Business membership of Energy Choice Now topped the 100 member mark.

·         The “queue” lists that are held by DTE and Consumers Energy of current customers who want to leave the utilities and take a competitively-priced electric supply option with an alternative  electric supplier (AES)surging past 5,500 businesses.

Since implementation of the cap on electric competition in late 2008, rate increases by Consumers Energy and DTE Energy, including the latest rate hike request by Consumers Energy, total 30 percent and 25 percent, respectively, for Michigan customers.

“We can’t afford to have high electric rates stall Michigan’s comeback,” said Mark Butler, Owner, VP Finance and Admin., Campbell Grinder Company, a Michigan machine manufacturer since 1969. “If we were able to shop for electricity in a fully competitive market, we could save significant amounts of money and pass those savings along to our customers and employees.”

Other Michigan businesses provided written testimony to the hearing:

“I am frustrated by my firm’s high electric bills, and want to encourage legislators to address the unfair, uncompetitive 10 percent cap on electric choice,” said Jonas McCluskey, president, Elm Plating Co. of Jackson. “While I, and likely all of my business colleagues in Michigan, appreciate the time and efforts legislators devoted to successfully addressing and changing unfair business taxes in Michigan, those taxes pale in comparison to our energy costs.

“We prefer to continue to operate our family owned plating, anodizing, and heat treating business here in Michigan where it started nearly 65 years ago.  However the draw to relocate to another state for a reason such as this, not to mention tax benefits, and many other regulatory reasons becomes stronger and stronger…. The state has come up with numerous incentives to attract new business.  It’s time to also focus on keeping and supporting those businesses that are here and would like to stay.”

The damage caused by the 10 percent cap on competition is not limited to small or mid-size businesses either.

“Our experience is that competitive electricity markets have allowed the company to lower its energy costs,” said Steve Elsea, whose job as director of energy services for Leggett & Platt, a Fortune 500 manufacturer, includes maximizing the energy value from supplier to point of use for Leggett & Platt’s global manufacturing operations.

“A prime example is in Ohio…Leggett & Platt has reduced its total electricity costs by almost 15% in Ohio since we have been buying through the competitive market.”

Leggett & Platt operates 140 production plants in 18 countries and employs 19,000 workers. We operate one hundred manufacturing plants in 22 states in the U.S. that employ approximately 9,000 American workers. Leggett & Platt operates five production plants in Michigan and employs approximately 350 workers.

“The fact is, energy is our third highest cost component behind raw material and labor. It is a cost of doing business that can determine the difference between being profitable or not.  We continually evaluate our cost of doing business in various locations, and have made adjustments ranging from closing operations where competitive choices were not available at one location and consolidating in another location where retail choice was available.”

The Gerdau Group, a specialty steel bar producer headquartered in Jackson, also provided live testimony to the committee. Gerdau, with world-class steel manufacturing plants in Jackson and Monroe, is the world´s 13th largest steelmaker and the largest producer of long steel in the Americas. Gerdau has 337 industrial and commercial facilities, operates in 14 countries and employs over 900 people at its two Michigan facilities.

Zehnder concluded his testimony by saying:

“I don’t feel government should be in the business of picking winners and losers.  This restriction has done exactly that for several years.  My family has had the Choice to choose our gas company for 24 years; please allow me to choose my electrical energy company too!”

Here’s a section from an Oct. 17 article in the Lansing City Pulse:

“Chris Thelen, an area manager for Consumers Energy, wanted language added to the proposals that would allow electric utilities to compete for any new businesses that might come after the agreements. As they’re written, the Lansing Board of Water & Light would supply power to any new businesses. Existing businesses, if they’re served by Consumers, would be able to stay with Consumers. Thelen said it is unfair that BWL would automatically get the new customers.

‘Our right to compete for new business is not protected,’ Thelen said during public comment.’It’s not right local businesses are treated this way. I’m not asking for special treatment or exclusivity. I’m simply asking for the right to compete for new business.’

Trezise, of the EDC, said it’s the city’s policy that the BWL provides power to the city. “If it’s in the city of Lansing, electricity will be provided by our utility. (The BWL) will not interfere or try to steal any business currently out there using Consumers for energy. This has nothing to do with our friends at Consumers. Policy-wise, if it’s in the city of Lansing, power will be provided by the Board of Water & Light.”

June data from the U.S. Energy Information Agency shows that as Michigan’s factories try to compete against other states, they find themselves in a hole thanks to electric rates. Indiana factories are paying 20.25 percent less than those in Michigan; those in Ohio are paying 18.91 percent less and those in Illinois are paying 15.05 percent less than Michigan industrial customers.

“It’s no wonder Michigan’s unemployment rates are higher than surrounding states,” said Wayne Kuipers, executive director of Energy Choice Now, a coalition of companies pushing for electric competition to lower rates. “Businesses are finding high electric rates a disincentive to ramp up production in our state. As Michigan tries to reinvent itself, opening the electric market to competition is a proven way to make us more competitive and help create jobs.”

Even worse, the report shows that Michigan electric prices are soaring higher at far faster rates than competitor states – some of which are actually going down. Illinois and Ohio, two states that are letting competition set rates instead of government bureaucrats, as is the practice in Michigan, saw rates decrease over the last year. Michigan’s rates increased at 4.6 percent – more than triple the national average, and far higher than inflation.

Those increases came even though total power use was down by 2.4 percent in the state. Normally, one would expect lower rates when demand is down – but not when monopolies are in charge.

“Our two major utilities keep telling us that they are working to hold down rates. The numbers tell us otherwise. Michigan cannot be competitive economically with these high rates – rates that continue to increase dramatically over those in place even one a year ago,” Kuipers said.

Following is rate from the EIA showing Michigan’s residential, commercial and industrial customers all paying more than any surrounding state.

Rates in cents per kilowatt hour: http://www.eia.gov/electricity/monthly/excel/epmxlfile5_6_a.xls

That was a major finding of an EPIC-MRA statewide poll of likely 2012 voters.  Poll respondents also felt that competition is a good way to keep energy costs low, and that they are more likely to vote for politicians who support competition.

The poll results come on the heels of national white paper, by economist Jonathan Lesser and released by the COMPETE Coalition, demonstrating how competitive electricity markets spur economic growth and create jobs. It details the importance of allowing market competition to determine “winners” and “losers,” not governments, which, it shows, have a long history of “invariably making the wrong choices.”

According to the COMPETE White Paper, because competitive electric markets are the best way to keep prices as low as possible, such markets will also provide the greatest opportunity for economic growth and job creation.

The Michigan poll reinforces the central message of the Customer Choice Coalition and Energy Choice Now – that Michigan’s electric monopoly is harming our state’s families and businesses, and a return to competition is needed.

“Michigan’s businesses, governments and working families are tired of hearing about much lower rates right across the border in states like Illinois and Ohio, where competition is holding down rates,” said ECN Executive Director Wayne Kuipers. “Michigan manufacturers are struggling to keep up with out-of-state competitors with lower electric costs and in-state competitors who were fortunate enough to get in under the cap. They deserve lower costs and better service.”

The poll question asked: “ … Would you favor a change in state law that would allow all customers to purchase their electric service from any supplier that is able to provide reliable electric service to their area and compete for customers by offering electric service at a lower price, or, would you oppose such a change and prefer keeping things as they are?”

Seventy-four percent of respondents favored changing state law, with 56 percent of respondents strongly favoring the change, and 18 percent somewhat favoring change. Only 12 percent strongly opposed a change, while six percent where somewhat opposed and eight percent undecided.

The survey also asked voters if they thought that “having competition among companies that provide electric service, like it has been done in the natural gas and telecommunications industries, is a good way or a bad way to control energy costs? “

Seventy-five percent of respondents said that competition is a good way to control energy costs, with 49 percent saying it was “very good,” and 26 percent saying it was “somewhat good.”

It’s no surprise that Michigan voters are frustrated. According to data from the Michigan Public Service Commission, DTE has raised residential rates by 10 percent annually since 2008, a whopping 29.9% increase. From 2000 to 2008, when DTE faced competition under state law, DTE raised rates for customers by about 3% per year.  Including their most recent 5% rate hike request, Consumers Energy (CMS) rates have increased on average by 30%, with commercial rates at 26%-31% and industrial rates soaring at 34%-38%.

The EPIC-MRA poll is a statewide poll of Michigan voters focusing on various issues in the news. The poll surveyed a random sample of 600 likely voters from August 6-9, 2011. All interviews were conducted by telephone using professional interviewers. The margin of error is ±4 percent.

You can also take a look at this document, which was handed out to attendees.

Top 10 Reasons Michigan Needs To Raise The Cap on Electric Competition