Shirkey: New Report Shows Electricity Competition Works

Illinois Study Clarifies Free Markets Provide Better Value

energyMike Shirkey says a new report shows electric monopolies cost families and job providers billions, and cripples local economies.

We knew that.

Apparently an Illinois study offers overwhelming Support for reforms Similar to Michigan House Bill 5184. State Rep. Mike Shirkey (R-Clarklake) highlighted the report today showing a dramatic $37 billion in consumer savings in nearby Illinois since that state replaced its monopoly-style electric system with competition and customer choice.  The report cites an $18 billion in savings for residential customers and $19 billion for companies and job providers.  Chicken feed. Yes?

Of course these findings are in stark contrast and the exact opposite of what has happened in Michigan, which abandoned its electric choice market in 2008 under Governor Granholm and began experimenting with a return to a monopoly style system. (recall the eagerness of those utilities to engage with the renewable mandate)  Electric rate increases in Michigan were more than $3 billion in just 2013 alone, even as the cost of producing energy was going down dramatically across the country.

Shirkey says:

“Michigan is competing in the Great Lakes Region and beyond every day to retain and attract jobs. While our neighboring states have either already gotten rid of their monopolies or are seriously contemplating doing so Michigan has instead gone in the other direction. Going back to a monopoly style system in 2008 has cost all of us dearly and is a seriously flawed, illogical policy that needs to be reversed.”

The report comes at a time when many on Michigan’s electric choice waiting list are hoping to make House Bill 5184 part of the state’s current energy policy discussions. The bill, known as the Michigan Electric Consumer Freedom Act, would let both residential and business ratepayers participate by removing an arbitrary, artificial cap on who is allowed to choose their provider.

Current law limited such choice to only the first 10% of Michigan applicants, a cap that was quickly met years ago and is now severely backlogged.  This has apparently created a long list of financial winners and losers in the state.

Shirkey notes that

“Energy costs are one of the largest expenses Michigan families and employers face and too many are forced to pay significantly higher rates than others in the Great Lakes Region”

Adding:

“House Bill 5184 will bring us in line with the kind of success our neighbors are seeing and provide a needed boost to Michigan’s economic recovery.”

The report is titled Electricity & Natural Gas Customer Choice in Illinois- a Model for Effective Public Policy Solutions”, and calls Illinois’ switch to competition a “triumph of market-based public policy”. Since that state embraced customer choice in 1997 it moved from having the 13th highest average electricity prices in the United States to prices among the 10 lowest states in the country.  Illinois rates now average about 30% less than average rates in Michigan.

While under electric choice in Illinois the results have been:

  • Significantly increased electric generation and supply
  • $37 Billion in consumer savings; including
  • $18 Billion in residential savings; and
  • $19 Billion in cost savings for industrial, commercial, government, and non-profit organizations

The report was issued by the Illinois Chamber of Commerce; the Illinois Manufacturers’ Association; the Illinois Retail Merchants Association; and the Illinois Business Roundtable.

Shirkey says Michigan has the highest electricity rates in the Midwest, and rates significantly higher than the national average. He also points out that reports are showing not just an added cost to ratepayers due to Michigan’s newly reinstated monopoly system, but also a severe impact upon jobs. According to former chair of the Illinois’ utility regulatory commission Dr. Philip O’Connor and economist Jonathan Lesser, a monopoly-style system also costs Michigan 21,000 in jobs each year.

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  2 comments for “Shirkey: New Report Shows Electricity Competition Works

  1. Tim Bos
    March 3, 2014 at 6:11 pm

    So the question remains- Why?

    Why do we continue to be penalized with an anti-free market energy policy in Michigan? Why, with a former successful CEO whose background is in accounting- as our GOP Governor, has the current policy remained in place, unscathed by his leadership- while a free market alternative solution languishes in committee?

    Why is a GOP-controlled legislature, which is often maligned by the left as "business friendly", sitting on their thumbs? Why hasn't the Chamber of Commerce by cheerleading in a compelling fashion for something that would have a direct and positive impact on the bottom line of every single one of their members- except of course for two, namely Consumers Energy and DTE?

    This absolutely reeks on so many levels, and only one party in Lansing is responsible for maintaining this disgusting and damaging status quo. Once again, while searching for the Michigan Republican Party and many of the politicians representing it, the first place to look is in the Hall of Shame.

    And finally, because of this and several other offenses- why should anyone lift a finger or spend a dime in support of any party with their track record?

    You Betcha! (0)Nuh Uh.(0)
  2. Corinthian Scales
    March 3, 2014 at 6:27 pm

    And, what Shirkey provides with one hand, he takes away with the other.

    You Betcha! (0)Nuh Uh.(0)

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