on May 10, 2016 at 10:20 AM
Peter Milojevic is president and CEO of Midland Cogeneration Venture, the largest natural gas fired electricity producer in North America. Richard Wells is vice president of operations, Canada & USA North, and site director of Michigan Operation for The Dow Chemical Company. MCV provides 100 percent of the energy for Dow's manufacturing operations in Midland.
By Peter Milojevic and Richard Wells
Every month, when Michiganders pay their energy bills, we are reminded again that our state has among the highest energy prices in the Midwest. A key driver of these high prices is the utilities' virtual monopoly over power generation.
For over two years, the state Legislature has debated whether the key to lowering rates lies in continuing the regulated-monopoly system or moving toward competitive energy markets. Two pieces of legislation before the Senate move in the wrong direction. In their present form, Bills 437 and 438 seek to create a complicated energy plan that will prevent potential competitors to the monopoly utilities from vying to build new generation capacity in Michigan. The bills create a bidding system for new generation that will be entirely controlled by the utilities — furthering their grip on Michigan ratepayers.
This is the wrong way to go. Only a fair and open competitive process will ensure families and businesses realize the lowest possible cost for new energy construction. This is a common-sense, market-based reform benefiting all Michigan ratepayers.
Competition drives innovation and helps ensure consumers receive the best value. This approach should be applied to the energy market. When new power plants are needed in Michigan, it's critical that all reliable and cost-effective options are seriously considered, with the best interests of the ratepayers placed first.
The current Certificate of Necessity process, managed by the Michigan Public Service Commission, allows the utilities to request approval for building new power plants, but without a robust analysis of alternative options. A fair and transparent competitive bidding process would put all options on the table for consideration before the commission approves the utilities' proposals.
Thankfully, a better option exists. Senate Bill 919, recently introduced by Sens. Mike Shirkey, R-Jackson, and Jim Stamas, R-Midland, ensures true competition in our energy generation market and stands to lower the cost for Michigan families and businesses.
Senate Bill 919 creates a fair and unbiased bidding process that is pro-ratepayer. It allows reliable energy producers to compete against the state-regulated utilities to build new power plants.
Senate Bill 919 requires the Public Service Commission — whose job it is to protect Michigan families in utility matters — to solicit and consider bids for new electricity capacity once it's determined new generation is required. This common-sense approach is used by everyone — families, businesses and state government — to ensure cost effectiveness while maintaining quality and reliability.
Perhaps this is why true competitive bidding for energy generation is supported so widely by Michigan businesses, chambers of commerce and schools, as demonstrated by their testimony in legislative hearings over the past two weeks. This stands in stark contrast to the proposal contained in Senate Bills 437 and 438, which is primarily supported by the regulated utilities and those with direct financial interests in them.
The Legislature has a choice to make between two distinctly different futures. We must insist the Legislature create a 21st century energy policy that balances the interests of Michigan families and businesses with the growth of utility profits by injecting common sense when it comes to new energy generation.