March 11, 2008

            LANSING − Attorney General Mike Cox today announced he is opposing a radical restructuring of electric energy legislation, PA 141, Michigan's successful electric choice law.  According to research, the proposed Renewable Portfolio Standard (RPS) bills and changes to PA 141 amount to six separate rate increases that would cost Michigan ratepayers and businesses $2.5 billion in new additional expenses per year, resulting in a 30 to 40 percent increase in electricity costs.  The bills also restrict oversight by consumer advocates, including the Michigan Public Service Commission, (MPSC) and the Attorney General.

            "This package of bills is anti-consumer and anti-competition.  It will hit hardest on seniors, the poor, and all those on fixed incomes, at a time when Michigan families are already struggling to make ends meet," Cox said.  "Michigan's job creators will also be hit by higher energy bills. The one certainty is that these changes will cost ratepayers more." 

            Among the proposed changes:

            Surprisingly, the sweeping changes are proposed even though Michigan has experienced the lowest commercial and industrial rate increases in the region since PA 141 was enacted.  At the same time, the two largest beneficiaries of the proposed legislative changes, Consumers Energy and DTE, are experiencing substantial profits.  Consumers expects a 50% increase in profits this year, while DTE's profits soared by 80% last quarter.

            The six separate rate increases and cost shifts are:

            According to Cox, "Cleaner energy is a laudable goal.  But this proposal tie-bars that benefit to greater utility company profits, more mandates, less choice, and much higher rates for all residential customers.  It's a bad bargain, and it should be defeated."

            Cox also noted that the one carrot being promoted, more jobs for Michigan, may also be misleading.

            "Michigan would need 50 wind parks to meet the mandate for 10% of Michigan's energy to come from a RPS," Cox noted.  "But each wind park creates no more than 10 permanent jobs.  At a cost of $1 billion per year, per wind park, that translates to $2 million per job!"

            "Given these six rate hikes and cost shifts, even if new jobs were to be created by renewable energy, the higher costs could force many businesses to close or relocate out of state.  Michigan's economy is likely to be even worse off if this radical proposal passes the Legislature," Cox warned.

            Cox also proposed a series of recommendations to the Legislature to protect consumers and ensure economic growth. Among the Attorney General's recommendations:

            1.    Allow imported renewable energy and Renewable Energy Credits (RECs) to meet any new Renewable Portfolio Standards (RPSs);

            2.    Allow full competition among utilities;

            3.    Do not allow the Certificate of Need (CON) process to force ratepayers into "fronting" money for the major utilities;

            4.    Do not allow the so-called "file and use" processes for utilities that would enable them to immediately raise rates before MPSC approval unless controls are in place to protect ratepayers while hearings are pending; and,

            5.    Do not change the MPSC deskewing rate formula.

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