Dive Brief:

• Schools, businesses and other groups are alarmed by what they say is a proposal by the Michigan Public Service Commission to effectively kill the state's limited retail choice program — possibly costing them millions on power bills.
• State Rep. Gary Glenn (R) says the PSC is expected to finalize rules on Sept. 28 that would institute a "local clearing requirement" on alternate energy suppliers, requiring them to purchase energy from inside the state.
• Last year, the state legislature passed a bill maintaining Michigan's 10% cap on retail choice customers, and opponents of the PSC proposal say it is directly contrary to what lawmakers intended.

Dive Insight:

Michigan's limited choice program was a central part of energy policy debates last year, and the decision to maintain the program at 10% was largely a detente between utilities who argue retail electricity choice complicates planning and consumers who say it lowers bills.

But now, consumers who take advantage of the choice program say regulators are considering rules that would fly in the face of last year's law. The PSC is considering rules to require electricity choice providers who compete with Consumers Energy and Detroit Edison, the state's incumbent providers, to prove they can supply their customers using electricity generated in Michigan.

“This is clearly a back door attempt by unelected bureaucrats to eliminate Michigan’s Electricity Choice program by bureaucratic regulation, a protectionist scheme that was pushed by the state’s two monopoly utilities in the last legislative session but was expressly rejected by the people’s elected representatives,” Glenn said in a statement.

According to Crain's Detroit Business, the state's 10 alternative suppliers sell electricity to 6,100 customers.

In July, the Michigan Schools Energy Cooperative informed regulators that the choice program had saved the state's schools over $140 million. Initial versions of Michigan's energy law, drafted last year, included local clearing requirements. But the schools, in their letter to the PSC, said "we are certain that the Commission understands" that those requirements were "later eliminated from the legislation."

“As you know, that language would have effectively eliminated the Electric Choice program, as DTE and Consumers own or have purchased virtually all local capacity and could and would either refuse to sell to [alternative energy suppliers] or sell to AESs at an above market price.”

Mackinac Center for Public Policy, a free market think tank, also decried the possible change.

"If the Commission is going to ignore the Legislature and its own lawyers, and push forward with its plan for an in-state mandate, one has to ask why they bothered with the regulatory review process in the first place," Jason Hayes, MCPP director of environmental policy, wrote in a blog post.