Thursday, April 17, 2008

Re-regulation of electric utilities: bad for consumers

This is a complex issue. The opinions expressed here, although shared by many, are mine.

House Bills 5524, 5525, 5548 and 5549 are bad bills. The intent of this package is to bring stability to the delivery of electricity to consumers. There is much that could be said here, but let me just say a couple of key things.

1. In an attempt to increase the amount of electricity generated by "renewable" sources like wind, waves, solar, etc. the package will mandate that by 2015, 10% of all electricity will come from these renewable sources. Today, that is economically unfeasible. So, to make it happen the generation of electricity from renewable sources has to be subsidized. Guess who is going to subsidize it? YOU are. You will have to pay an extra $3 per month on your electric bill. This money will help cover the cost of providing you with electricity from wind, solar, etc. Some will say you are "investing in new jobs". I will tell you that you are being taxed and that the $6 billion in new taxes you will help pay (through the $3 per meter increase) will be redistributed to "create" new jobs.

2. Currently, we have under statute, something called electric choice. Residents and businesses can purchase electricity from "alternative energy suppliers". It is, although somewhat flawed, a free-market approach to providing electricity. It helps keep rates lower. This package of bills essentially wipes out choice. It says that no more than 10% of all the electricity used in this state can come from alternative energy suppliers. Basically, we are making it difficult, if not impossible for alternative energy suppliers in Michigan to compete. How will it affect you? Well, less choice means higher prices...

Feel free to read the bills and the spin from each side of this issue, but in my opinion, this legislation is anti-free market and anti-consumer choice.


Dwallin60 on said...

It is exciting to me that there will be mandate for no less than 10% renewable energy purchase requirements by utilities by 2010 to encourage alternative energy INCLUDING big WIND. $3/customer is small potatoes if that money actually gets into the hands and can be effectively used through financing grants by entrepreneurs to develop big WIND farms in Michigan. Otherwise Jack is right.

We had our 1st exploratory meeting here in Hillsdale for a Community WIND Energy Project. The meeting adjourned sine die because there is insufficient WIND energy data at 100 meters for an informed choice by electric consumers to agree or disagree with Jack. But here is what is needed.

We need a federal grant to do "a 1 year Wind energy density data study" atop every cell tower in the State of Michigan to assist developers to properly locate those $2 million towers in such places interior to the state that show ROI to be feasible for financing. It is not likely and too expensive for it to by other than government.

Further, utilities need to be regulated to become "customers" of consumers so that power is locally owned and not held any longer by utility bonds in some foreigner's hands whether other country or external to the counties in which they are sited. This will afford continuous cash flow to LOCAL investors as owners that also will build investment capital for community projects AFTER the wind towers and big WIND farms are both capitalized and paidoff since wind is free and clean less maintenance and replacement costs. Western states are doing this already and we here in Michigan need to pay attention to best practices.

Jason Gillman Jr. said...

#1 clearly points out this falls under the 'Broken Window' fallacy.

SAH_mommy2three said...

Well... if 3dollars a customer means we are on the road to using less imported energy sources then I am all for it. We are far behind other countries and states in terms of becoming environmentally friendly and using less energy... every step is a step in the right direction.