Part III – Clash of Titans, Viewed from Below

Fortunately, the greed political acumen of DTE and CMS Energy is coming to your rescue. Both utilities are seeking full reregulation of Michigan’s electricity market. They are issuing thinly veiled threats about brownouts ‘reliability’ of supply unless Michigan forces the fortunate 10% back into our utilities’ waiting arms. And with President Obama’s hobbling of coal-fired power stations ramping up, they actually have a point. So the fortunate 10% will have to seriously reengage in Michigan’s electricity rate debate or their electricity costs will skyrocket.

The environmental wackos haven’t been idle either. The new model, term limited, Governor Snyder has evidently made up with our ur-RINO and is now endorsing a 40% RPS by 2040. To keep Michigan’s serfs in line – and avoid impeachment – he is specifically not calling for this to be a mandate, rather calling it a ‘goal’. Coming from Michigan’s Governor, this is a distinction without a practical difference. Snyder appoints the three MPSC commissioners who oversee electricity policy and MPSC operates under the aegis of LARA. Think Governor Duggan, Snyder’s designated successor, will change this policy? Other Michigan politicians are splitting the difference, proposing RPS mandates intermediate between 10% and 40%.

The single most important thing to remember as you watch this clash of titans unfold is that none of the major combatants are your friend:

• Michigan’s utilities view you as nothing more than an account receivable. This is as it should be in a free market economy.  Michigan’s utilities have launched a major campaign to end the 10% deregulation vestige that still exists under PA 295. Someone has put up an anonymous website on the utilities’ behalf recently. CMS Energy has reactivated CEME, a front group first deployed in the 2012 Proposal 3 fight. Michigan’s utilities have tacitly endorsed RPS with a lot of glowing PR on their wind farms and energy consumption reduction efforts. They could be tempted to support increased RPS percentages if they were cut a larger share of the profits from it. Bear in mind that the profits of a regulated utility are strongly coupled to their costs, as regulation generally allows them a fair rate of return on their capital and expenditures. So as their costs rise, your billed price for electricity rises in lockstep. This is the perverse incentive that drives up prices under regulation; a regulated entities’ rising costs lead to rising profits.
• The fortunate 10%, large electricity consumers who have free choice, want to maintain their low electricity rates and are willing to sacrifice you to the utilities to maintain those low rates. Large electrical consumers who have been able to choose low cost electricity suppliers are now mobilizing to preserve that choice. As long as that choice is preserved, choice for other Michiganders, RPS, and the utilities’ charges for electricity are of little concern to them.
• The environmental wackos want to de-energize your lifestyle into a pre Edison tallow candle existence and don’t care who makes money off this return to the Dark Ages. Electricity cost and profits are irrelevant to them, but they do love images of solar panels and wind turbines as a sign of progress. Green Tech Action Fund and the other financiers of the environmental wackos represent venture capitalists who do make a lot of money on RPS, so the environmental wackos are not going away quietly anytime soon.
• The Obama Administration wants to end fossil fuel consumption in the U.S., starting with coal. It appears that they are willing to countenance an intermediate conversion of existing coal-fired boilers to natural gas, but ultimately they want to end fossil fuel use in the U.S. MSU’s conversion of the final boiler at their T.B. Simon power station to natural gas presages this future. The Obama Administration believes that artful subsidies and tax credits can manage consumer outrage over skyrocketing prices. Implied but unstated in the Obama Administration’s energy policy is an end to the national electrical grid, with electricity generated by consumers on site or in the immediate proximity of consumers. Sort of an updated vision of the feudal state. And a vision which cause massive displacements in Michigan with its traditional economic base of energy-intensive industries.  Fully implemented, the Obama Administrations feudal vision will fractionate the real estate market across America into energy rich and energy poor areas.
• Michigan politicians want this issue to go away, except for the rich treasure trove of campaign contributions it has generated. Michigan politicians reregulated 90% of our electricity market in 2008 as a way of splitting the difference between two powerful constituencies: utilities and large consumers. The unfortunate 90% turned over to the utilities were expected to be protected by the MPSC, but this did not happen. The 10% deregulation model is still politically attractive today, unless Michigan’s smaller electricity consumers band together and vigorously oppose it. Most combatants in this debate expect the complexity of Michigan’s energy situation to minimize general public involvement or outrage. This particular stratagem has not been notably successful in the Proposal 2015-01 fight, but there is yet no indication that the current electricity fight will wind up on the Michigan ballot.

Michiganders are noticing that their electricity bills are rising sharply, however, and asking how this is happening despite widespread conservation efforts. The mainstream media are ignoring this smoldering backlash, but you can see it in comments to current MSM articles on Michigan’s electricity debate. So there is an inchoate political mass developing out there looking for direction.

In our conclusion tomorrow, we’ll present elements of a right action plan to control your electric bills and promote sorely needed economic growth in Michigan.