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01-01-2001 12:00 AM
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admin
  - Joined on 11-22-2008
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2007 House Bill 5524 (End electric power provider competition )
Introduced in the House on December 4, 2007, to mostly end the state’s electric competition law that allows customers to choose an alternative provider; allow the utilities (primarily DTE and Consumers Power) to impose surcharges on customers so they can recoup the “costs” incurred from Michigan’s experiment with competitive electricity markets; and gradually phase out current cross-subsidization of residential customers by commercial and industrial ones. The proposed law would prohibit competing power companies from garnering more than 10 percent of the electricity market, even if they offer lower prices The vote was 78 in favor, 30 opposed and 2 not voting (House Roll Call 297 at House Journal 35) Click here to view bill details.
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Admin003
- Joined on 11-22-2008
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Rep. Sheen, having reserved the right to explain his protest against the passage of the bill, made the following statement:
“Mr. Speaker and members of the House:
I cannot support House Bills 5524. These bills will severely hurt consumer competition in the electric industry, which in turn will drive up costs. By supporting these bills we will be allowing DTE and Consumer’s Energy to be guaranteed a certain number of customers, which is what a monopoly. Due to the horrible condition of our economy, Michigan residents are already dealing with economic difficulties. These house bills will ultimately limit consumer choice, raise electric rates, and monopolize the electric system. Though establishing an energy efficiency program in Michigan is an admirable goal, the proposed house bills are not the best route to achieve this. Having been a financial advisor for twenty years, private capitol is raised through venture capitol and issuances of stocks and bonds. Our entire capitalistic system is biased on this. Why should the state of Michigan have to promise Consumers and DTE anything when they can do the same thing that every other private company does to raises capitol to build a new facility which will generate a profit. Government should not pick winners and losers, they should not pick one energy company over another, and they should stay out of the market place! This is also a mandate requiring our industries to meet various renewable standards by specific dates. I support renewable energy, but I do not support mandates, I support incentives. We do not need to increase the cost or the difficulty of doing business in Michigan, these provisions most definitely will. For these reasons, I will not support the proposed energy bills.”
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Admin003
- Joined on 11-22-2008
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Senator George’s statement is as follows:
The effects of increasing energy cost are similar to the effects of high fuel costs or high health care costs on our state’s economy. These rising fixed costs lead to inflation, decrease competitiveness, and job loss. Rising fuel costs, the most recent example, are clearly having dramatic effects on Michigan’s economy. Four-dollar-per-gallon gasoline has led to falling sales of pickup trucks and SUVs and yet another round of automotive restructuring, including plant closures and layoffs. Indeed Michigan’s unemployment rate leads the nation at 8.5 percent highest in 14 years. General Motors stock is valued at its lowest level in 33 years.
What is the consequence of rising fuel prices? Change in consumer buying patterns, an incentive for efficiency, and a renewed interest in alternatives to gasoline. Alternatives might be walking or bike riding, car pooling, moving closer to work, planning your day better, or in Oakland County, 40-hour work weeks compressed into four days instead of five. I would note that none of these required state government intervention. None of these stemmed from any action in Lansing. These changes in the economic behavior have occurred despite, or in spite of, any decrees which we may issue here.
Now with rising fuel prices, energy prices will also inevitably rise. This is because the cost of three of the main fuels for electric generation. Coal, natural gas and petroleum have all risen dramatically in recent months. Moreover, as neither coal nor natural gas are mined here, rising gasoline prices lead to increased costs for transporting them to Michigan. Increased fuel prices for electric generation can only mean one thing for purchasers increased prices. This applies to residential as well as commercial and industrial purchasers.
And as electric prices rise, behavior will change just like with gasoline. There will be a new interest in energy-efficiency measures. There will be new interest in alternative sources of electric supply. There will be renewed efforts to find new sources of suddenly more valuable fuels coal, natural gas, and petroleum. There will be renewed interest in renewable energy sources such as hydroelectric, solar, and wind. There will be renewed interest in nuclear power. Why? Because of some artificial standard that the state will adopt? Because of some decree from Lansing that consumers must buy electricity generated in such a fashion? Because the Legislature and the Governor say so? No, the increased interest in energy efficiency, in new sources of traditional fuels, in the construction of new generation plants, and in renewable sources of energy will occur because of the cold reality of the marketplace. It is the costs of fuel and electric generation that will drive the search for solutions to our energy problems, not the Michigan Legislature nor the Governor.
Michigan is well-positioned to be a leader in emerging sectors of the energy industry. Given our research universities, we could be a source for new ideas, for innovation, and for the development of new energy technologies. And given our geography, we could become a supplier of electricity generated from renewable sources wind, solar, and water generated. We could become a supplier to meet the demands of other states in the Midwest.
Unfortunately, the legislation before us does not allow us to take advantage of the changes in the economy so as to position Michigan to be a leader in this emerging sector. Instead of fostering competition and inviting companies to Michigan that are leaders in renewable energy, inviting them to invest here to build generation facilities here this bill takes us in the other direction. It diminishes competition. It re-monopolizes our energy industry, diminishes the authority of the Michigan Public Service Commission, and places new surcharges on energy purchasers.
Now the funds collected from one of these surcharges would be used by the two incumbent utilities to create programs promoting energy efficiency. Another surcharge would fund a renewable portfolio standard, and yet another surcharge would be for funding construction of new plant generation.
This mechanism is flawed. We do not need a surcharge set aside for the construction of new generating plants. If demand is truly rising, and there is some debate as to whether, in fact, it is, then investors and producers have sufficient incentive to build new plants.
This package takes Michigan in the wrong direction. It fails to seize on the dynamics in the energy industry to make Michigan a leader in this sector. Rather, it creates unnecessary new surcharges, raising the costs to consumers, it lessens competition, and sends a go-away signal to potential investors and new businesses. I encourage a “no” vote.
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Admin003
- Joined on 11-22-2008
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Senator Brown’s statement is as follows:
We all see things differently, and the beauty of America is that we can express that difference freely, even by a vote. With that said, the issue before us cries out for leadership. We can be leaders, or we can be blind followers of legislation from the House.
In the midst of this important decision, there is one thing that everyone involved in this energy debate can agree on Michigan needs a long-term plan to meet its future energy needs. Now there are those who would have us believe that the only way to meet these energy needs is to eliminate competition in our energy market, grant monopoly status to two companies, and subject customers especially residential customers to massive rate hikes. This is simply not true.
Competition has made our incumbent utilities more efficient and more effective, by their own admission. With competition, customers can be assured that the most affordable new plants are built. Without competition, customers can be assured that the most expensive new plants are built. Plants like the ill-fated Midland nuclear plant, which had cost overruns of nearly $5 billion, or the DTE plant in Monroe that had overruns of over $4 billion when we last had electric monopolies in Michigan. Was it the company’s investors who picked up the tab of these massive overruns? No, it was the customers, just as it will be with this bill, thanks to a total lack of oversight.
In addition to granting monopoly status to two companies and allowing for massive cost overruns, the bill before us will drastically reduce customer protection, allowing for rate hikes without the Michigan Public Service Commission oversight. Make no mistake, all of these company-friendly features of the bill are very customer-unfriendly. There is no arguing that they will result in massive rate increases for Michigan electric customers.
It is hard to fathom that a chamber that so labored over a tax increase last year is prepared to pass bills that will lead to massive electric rate increases for Michigan residents who are already strapped by mortgage problems, unemployment, and $4-per-gallon gas. Do not be fooled, the bill before you does not contain any guarantee by itself that new generation will be built in Michigan. The only thing you can guarantee your constituents by approving this bill is massive rate hikes at a time when they can least afford it. The certainty that the incumbent utilities need to ensure financial backing for new generation in Michigan can be achieved without eliminating choice and competition, but that path will be barred by the passage of this bill.
To be sure, Michigan electric customers won’t blame DTE and Consumers Energy when they see massive rate increases on their utility bills. They won’t blame the Michigan Public Service Commission either. They will, however, blame this Legislature, and specifically, the ones who voted for this bill. I urge a “no” vote on House Bill No. 5524.
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Admin003
- Joined on 11-22-2008
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Senator Hardiman’s statement is as follows:
Tonight we have heard much discussion on this whole topic of House Bill No. 5524 and on the issue of energy. I would say for myself, over the last month, I’ve never had as many meetings and discussions on this topic of energy as I have had over the last month. I appreciate the discussion I have had with the current utilities and the members of the committee. I don’t see this as an issue of good or evil on one side or the other. What I have tried to do is ferret out the information as best I can, and I know a lot more about this topic than I did a few weeks ago.
I am by no means an expert, but I do believe this to be the crux of the issue: How do we ensure that we provide affordable and reliable energy for the future for the people of the state of Michigan? How do we provide for the financial backing so that we can build appropriate plants to produce the energy? One way is to put a cap on choice. I think there are other ways. For me, simply, it means this: I do believe there are other ways and I appreciate choice. I would like to see us try those other ways; it is as simple as that.
Others are perhaps more learned on the issue, but I have heard people who are very learned speak to both sides of the issue. This is where I fall out. I believe it is best for the people of the state of Michigan that we do not move in this direction, but that we move in another direction. That is why I am going to vote “no.” I appreciate all those who have searched their own hearts, looked at the information before them, and voted their consciences.
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Admin003
- Joined on 11-22-2008
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Senator Patterson’s statement is as follows:
I have listened intensely to the debate tonight and to the facts and the evidence adduced over months and months and months of hearings, independent study, and committee collaboration. I have heard about the essential component that is lacking—being competition. What those who are speaking before me in favor of more competition seem to fail to understand is even the most basic words that had been thrown around, like “price” as though it was synonymous with “cost,” or synonymous with “rates.” Previous speakers have used those words as if they knew of what they spoke. Tragically, their iterations have proven that they do not. Sadly, those words, if intentionally uttered, must have been done so to deceive and to tear down what may not be a perfect work but is a good work, and is necessary for the future of Michigan.
I do not want people to be confused. Electricity and its generation, transmission, and distribution has a certain absolute criticality everybody needs it. If those who want competition want unbounded competition, they should be promoting and advocating for total deregulation, in which case, there would be no rates. Then those constituents whom they hope to serve and save will be able to pay as much as $700 per megawatt hour. Instead of paying 8 cents per kilowatt hour, they will be paying from $70 to $100 per kilowatt hour because that is the price it will take to be paid. So when your grandfather or your grandmother are home with the air conditioning going in the really hot weather when demand is the highest, they will be toasty. When you talk about toasting, they won’t be able to even run their toaster because there will be no obligation to serve.
The free market will indeed prevail. Those of us who have the means will continue to be able to acquire electricity. Those who don’t have the means, they can suffer in the heat, or they can cook over a bonfire, but they are not going to be able to get electricity pushed through that wire to their home. There is not going to be an obligation to serve. We are going to leave it to the free market. Those who don’t have the money won’t be getting any electricity.
Those of you who are proponents of competition, I submit to you, I have a vehicle bill to eliminate regulation entirely. I have told you this before. Nobody who believes in total competition, who understands the issue, has had the courage to step up and propose that we deregulate.
So I have heard enough. Don’t believe those who preceded me in conversation with a “no” vote explanation and suggest they know anything about this issue; or that they have the poor consumer’s interest at heart. Poppycock.
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jimc57
 - Joined on 11-22-2008
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no electrical competition
No competition in the energy market.....doesn't sound like the direction we should be moving in Michigan....so full speed ahead....last one remaining turn out the lights
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Admin003
- Joined on 11-22-2008
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Rep. Sheen, having reserved the right to explain his nay vote, made the following statement:
“Mr. Speaker and members of the House:
I cannot support House Bill 5524 and SB 213. These bills will drive up the cost for both consumers and Michigan Business. This bill will reduce competition to 10%, and give Consumers Power and Detroit Edison a guaranteed customer base of 90%, which by any measure is a virtual monopoly. It also mandates that 10% of our energy must be produced by renewable energy sources by 2020, and will add an additional charge on every Michigan citizen, business, and industrial user’s bill.
In a free enterprise system if someone wants to start a new business, build a new facility, or advance a new product line; they send out a venture capital, stock and bond offering inquiry to see if there is interest and support. If there is sufficient interest and support they get their venture capital, sell the stock and bonds, and they start the business, build the facility, and put the new line into production. That is how our entire capitalistic system works and has made America the greatest economic power in the world. This system should not be applied to one industry, but not another, it should apply to all industries equally. Consumers and DTE are great companies but why should the state of Michigan have to promise them anything, when they can do the same thing that every other private company does to raises capitol to build a new facility which will generate a profit.
These bills limit consumer and business choice, create costly and unrealistic mandates, and monopolize Michigan’s electric system, all of which will drive up electrical costs. Government should not pick winners and losers, they should not pick one energy company over another, and they should stay out of the market place!
For these reasons, I will not support the proposed energy bills.”
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Admin003
- Joined on 11-22-2008
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Senators Brown and George, under their constitutional right of protest (Art. 4, Sec. 18), protested against the adoption of the first conference report on House Bill No. 5524.
Senator George moved that the statement he made during the discussion of the conference report be printed as his reasons for voting “no.”
The motion prevailed.
Senator Brown’s statement, in which Senator George concurred, is as follows:
I rise to oppose House Bill No. 5524. With the passage of this bill and the RPS bill that it is tie-barred to it, Michigan residents will have to add increased electric rates to the list of expenses that are already straining their budgets, including higher gas prices, higher grocery prices, and higher tax bills.
As customers, electric rates are increased due, in large part, to this legislation. The opportunity to shop for the best price will be all but eliminated. Public Service Commission oversight of electric rate increases will be diminished. Ratepayers will be saddled with the cost of construction projects before construction even begins. And cost overruns of up to 10 percent will be automatically passed on to customers in the form of rate increases. This means a $5 billion nuclear power plant could run as much as $500 million over budget with no repercussions.
Think about what we are on the verge of doing. This bill would require the state of Michigan to guarantee a 90 percent market share to two private companies. Not a bad deal if you’re an employee or a shareholder of one of these companies. I’m sure that GM, Ford, and Chrysler—and their shareholders—would appreciate it, too, if the Legislature guaranteed them 90 percent of the automobile market in Michigan. But we haven’t done that for them for the same reason we shouldn’t be doing it now for our energy market—because it means fewer choices and higher prices for consumers.
Unlike the service tax or the problems with the MBT or any of the other legislative shortcomings of recent years, what we do today cannot be undone. Once this bill passes, the utilities will bond for billions of dollars. Then, should legislators come to the realization that competition keeps prices in check and improves performance, it will be said it is too late to go back now.
To be sure, there are ways to meet Michigan’s future energy needs without eliminating competition and legislating monopolies. Unfortunately, and here is the sad part, that path has been blocked. That path would have addressed the issue of market certainty—that one overriding issue the incumbent utilities brought to us for resolution. As I indicated in conference committee, I will repeat that one overriding issue the incumbent utilities brought to us for resolution—certainty in the marketplace. But what we have done instead is vastly overreaching and decidedly contrary to sound free market economic theory and practice.
Sadly, the fact that the majority of members in this chamber seem unwilling to consider the other option available to us will be a great source of frustration for Michigan residents when they see their electric bills. I urge a “no” vote.
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Admin003
- Joined on 11-22-2008
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Senator Gleason’s statement is as follows:
I can’t be more excited than I am at this moment about seeing Michigan moving into the 21st century. We have lagged behind too many states for far too long. As I said before when we addressed this issue, I, myself, have worked at a nuclear power plant in Midland, Michigan. I have worked at the Karn and Weadock Plant in Essexville. And I worked on the Buick Powerhouse in Flint, Michigan. These are high-paying, high-skilled jobs that offer great compensation both as a wage and a benefit package for Michigan workers. We know the state that they are in today.
I would also like to commend those who were diligent and very progressive in thought in moving this legislation forward. When you see all of the things that we addressed with this legislation, we are moving the opportunity for high-paying jobs to be advanced here in the state that we have already fallen behind over two dozen states across this country. When we look at the safeguards that we have taken, I worked on the Midland nuclear plant and I see the tremendous overruns and the advanced costs of trying to build that nuclear power plant in mid-Michigan. We have taken the diligence and the responsibility to shorten up the cost overruns for only 10 percent, which is very unusual and unique in the business. We are going to close the window for wasteful spending on future opportunities for new energy and new jobs.
Also I would like to thank the Governor for making this a priority, that we join forces that have already taken this step. This is a minor step. When this discussion began, other states across this country had implemented a percentage of what they wanted in their renewables portfolio. They have advanced further than we have, but we are at least now in the game that we can offer alternative fuel. Many people talk about the condition of our Earth, our state, and our country today, and they title it under an inconvenient truth. Well, today we have the convenience of having the opportunity to advance renewable and clean fuels. We also have the truthful convenience of offering jobs—high-paying jobs.
I would ask all of us to think for a moment of what the vehicle that we are going to drive in less than a decade will look like. Many of us, in a decade or sooner, will have an electrical plug in our garage that we can energize and fuel our vehicles for in the future. This is another step. When we in this chamber and across the state of Michigan pull out our laptop computers, cell phones, and iPods, these were all collateral gains. These were gains that were generated from NASA. When we were propelling man to the Moon, we never thought that we would come along with communication. Could you imagine your grandparents wondering how we would ever link up dialogue from man to man in such expanses?
We can never measure and we can never determine what collateral gains we will acquire by moving the envelope forward for alternative fuels. We see today the consequences of fossil fuels, and we see the shortcomings of not moving forward with alternative fuels. This is a responsible vote today. We can’t thank and we can’t be more generous to those who advanced this cause by the numerous hours that they put forward to make sure that Michigan joins the 21st century not only in fuels, but in employment opportunities. Our young kids today who go to Michigan State, Michigan, and our other great universities can now study alternative means by taking what we could generate from the switch grasses, from the waste, and offer us once again collateral gains on energy. Our grandparents had no idea that we may one day be fueling our economy with nuclear energy.
When this discussion is moved further, who can say what advantages and advances we will have in fuel. So I commend the Governor and her administration and all those who worked on behalf of Michigan to move them forward with this alternative fuel package. It’s not enough, but it’s something. Let’s take advantage, let’s take this opportunity and the responsibility to move Michigan forward in this new age of transportation, energy, and possibly medical.
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