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.

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