The Michigan state legislature is considering raising a cap on the number of electricity clients that can buy their power from alternative sources, a move that could drastically lower energy prices and increase renewable investment in the state, according to a report in Mlive.com.
Currently, the states power supply is dominated by two companies: DTE and Consumers Energy. Only 10 percent of their clients are allowed to source their electricity from alternative suppliers, according to the report. That cap was quickly reached after being put in place in 2008, with companies racing against each other for the opportunity to sign up for alternative suppliers.
A bill was introduced in May that would raise that percentage to 25 percent, though it remains in committee. According to the report, the state faces higher energy costs than other markets due to the existence of this functional duopoly, a situation which is beginning to have a serious effect on business investment.
According to the report the state has lost more than $1 billion in investment opportunities as companies seek to invest in more competitive energy markets. Mlive also reported that other electricity markets that have opened themselves up to competition have experienced a 50 to 60 percent decline in electricity costs, while 80 percent of new wind development has occurred in competitive, rather than closed, markets.
Meanwhile, Consumers has raised rates by a combined 7 percent over the last two years, and is now requesting an additional $150 million rate increase, which could go into effect as soon as the end of the week. A spokesperson for Consumers described efforts to open the market up to competition as premature and could harm its ability to fund future infrastructure investments.
Consumers says that high electrical prices are caused by its dependence on coal. Coal-burning plants make up 60 percent of the state’s energy supply and, with no in-state coal reserves to tap, Consumers must import its supply from states like West Virginia.
The company is also the leading supplier of renewable energy in the state, sourcing 4 percent of its energy from renewable resources. The state government has mandated that 10 percent of electricity be sourced to renewable resources by 2015.
Some large companies doing business in Michigan, however, say the state’s closed energy market is hurting their bottom lines. Legget & Platt, a manufacturing companies with facilities throughout the world, said its energy costs in Michigan were 20 percent higher than in state’s with competitive electrical markets like Texas and Mississippi.
Meanwhile, Detroit Edison, a subsidiary of DTE Energy, recently announced it has provided more than $1 million to customers in Southeastern Michigan to help power their homes and businesses with solar energy through its SolarCurrents program.
The company is also seeking commercial customers to participate in its SolarCurrents program that aims to generate 15 megawatts (MW) of solar energy in southeast Michigan over the next five years