Michigan’s Democratic-controlled House last week passed a measure that would restrict competition facing the state’s two dominant electric utilities in a measure that proponents said would give the utility giants the revenue necessary to build much-needed new power plants in the state.
The bill would restrict competitors to the two largest utilities from supplying more than 10% of the state’s power to business and school customers. The measure, which passed the House 78 to 30, would change how rates are raised and would smooth out existing price differences paid by retail and commercial customers.
Michigan’s retail customers have historically paid lower electric rates than its business customers, but the new measure would ensure that retail customers would pay the “true” cost of electricity. Officials estimate residential customers would pay about $350 million more over the next five years as part of the payment shift.
Representatives from the two utilities, investor-owned DTE Energy in Detroit and public utility Consumers Energy in Jackson, said the law is necessary so they can generate enough revenue to obtain loans to begin building new power plants by 2015. Together the two utilities currently supply about 86% of the state’s electricity.
The bill now goes to the Republican-controlled Senate, where it is expected to face more opposition, as groups step up lobbying efforts against the measure.