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House Committee Votes to Limit Electric Choice

Aaron Keel

By Aaron Keel, MASB Assistant Director of Government Relations

DashBoard, Nov. 18, 2015

The House Committee on Energy Policy recently passed a package of bills that would dramatically change Michigan’s energy laws. The package includes House Bill 4298, which will lead to the elimination of electric choice for schools and others.

Many committee members criticized the process after having only 48 hours to digest the substitute language before having to vote on amendments and report the package to the full House of Representatives; the vote was 18-7. Now, HB 4298 is on the fast track, with the bill sponsor and committee chair, Rep. Aric Nesbitt (R-Lawton), indicating he would like it done by the end of the year. Look for House action on this issue as early as Tuesday, Dec. 1, the day the Legislature returns from break.

Current energy law allows up to 10% of an incumbent electric utility’s (such as Consumers Energy or DTE Energy) average sales to take service from an alternative electric supplier. AESs currently serve electric choice customers all over Michigan, typically with substantial cost savings. For instance, over the past two years, schools around the state have been able to save roughly $35/pupil for more than 540,000 students through participation in the electric choice program.

However, HB 4298 would systematically eliminate electric choice in Michigan. Under the bill, customers who leave their AES and go back to the incumbent utility would be forced to remain with that utility for up to 20 years. Further, customers who decide to remain with an AES would be required to pay the incumbent utility a capacity cost for 15 years. Finally, the legislation would force AESs to unnecessarily purchase capacity, driving up electric choice prices, effectively reducing or eliminating savings, and forcing customers to return to the incumbent utility service.

HB 4298 does not save electric choice. Instead, it creates disincentives for schools to participate and increases costs for AESs.

MASB will continue to oppose HB 4298 as it is currently written and advocate for schools’ ability to achieve a lower rate by participating in electric choice programs. We will update you as the bill package moves through the process and send an alert if action is needed.

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