Dive Brief:
- Officials from DTE Energy and Consumers Energy have warned Michigan lawmakers that the state faces a serious power shortage next year, meaning power prices could spike and send markets into disarray.
- Utilities are worried that the state's energy choice law, which allows for 10% of a utility's capacity to be purchased out of state, makes it difficult to plan for future needs, especially if those customers return.
- Supporters of energy choice call the argument a scare tactic and argue that the state's market should be entirely deregulated.
Dive Insight:
It seems no one is happy with Michigan's energy choice law, which allows for customers to purchase up to 10% of a utility's capacity from outside the state. Utilities say it makes planning impossible — how can they tell if customers will opt to return, should prices spike? Energy choice advocates say utilities would be foolish not to plan for potential market upheaval, and the solution is to entirely deregulate the markets.
The Midcontinent Independent System Operator (MISO) has projected a 3 GW capacity shortfall in Michigan by 2016. DTE and Consumers say they have sufficient contracts in place to serve existing customers, but if prices spike and choice customers come back, then the issue changes.
"We know that we cannot rely on short term wholesale capacity markets, supported by shrinking supplies of excess generating capacity, to reliably serve our customers over the long run," Irene Dimitry, vice president of business planning and development for DTE, told Michigan's House Energy Policy Committee.
Republicans have proposed eliminating the state's energy choice law, taking the state back to a fully-regulated energy market in an effort to address the potential energy shortfall. Nine of the state's coal-fired facilities are set to shutter in response to coming EPA mandates.
