Electricity ratepayers bear heavier burden in Michigan

Larry Ward is executive director of the Michigan Conservative Energy Forum in Lansing.

The debate about Michigan’s energy future is heating up again in Lansing – and Gov. Rick Snyder has said keeping costs low is a top priority. The Michigan Conservative Energy Forum (MCEF) wholeheartedly agrees that Michigan should have the most affordable energy mix possible.

We also believe accountability is important at a time when there are more lobbyists than lawmakers helping shape our energy laws. That’s why we’ve studied Michigan’s current energy situation and stacked it up against the governor’s goals in a new analysis. This data is not easily discoverable for ratepayers and, as a result, MCEF will continue generating this electricity rate report card to hold our utilities accountable.

Because when it comes to cost, the fact is, Michigan just doesn’t stack up.

The latest data show Michigan has some of the highest electricity rates in the Midwest. Michigan ratepayers, including families and small businesses, continue to be saddled with ever-increasing electricity bills.

Electricity bills have many components, including fixed monthly charges, charges based on the customer’s peak rate of power usage and charge per kilowatt hour used. The most meaningful measure of electricity costs is what we pay for the electricity we use.

The MCEF analysis uses publicly available data from the Energy Information Administration of the U.S. Department of Energy, which collects monthly data from each utility in each state on the amounts of electricity sold and revenue from these sales, divided into different classes. For our analysis, we focused on the cost of electricity for residential users. Calendar year 2015 is the most recent complete year for available data, so we compared electricity costs in the various states in terms of cents per kWh.

Let’s further analyze a breakdown of costs for the three key categories of energy users: residential, commercial and industrial customers.

Residential customers

Michigan families deserve a fair price for the electricity they use. Unfortunately, as the Report Card demonstrates, we found that Michigan ratepayers are the hardest-hit among all customer classes in our state. Michigan has the highest residential electricity costs in the Midwest. Nationally, Michigan has the 12th-highest residential electricity rates. Rather than having extra money in their pockets, families are stuck footing the bill for an outdated energy infrastructure.

Commercial customers

Small businesses are fundamental to Michigan’s economy, and they need access to affordable electricity to grow and flourish. Businesses in Michigan are not getting a good deal on their electricity costs. In fact, Michigan has the second highest commercial customer cost for electricity in the Midwest and 17th-highest in the nation. When businesses are looking to invest in our state, the high cost of electricity can be a major disincentive.

Industrial customers

In order to boost Michigan’s economy and attract industry and 21st-Century manufacturing jobs back to our state, we need competitive electricity prices for industrial users.

In relative terms, when considering Michigan’s poor track record on electricity costs, industrial users get the best deal for electricity – but not by much. Our state has the sixth-highest average electricity costs for industrial users in the Midwest and the 21st-highest in the nation. Simply put, we have much room for improvement in controlling costs for industrial users so they are able to expand their operations, instead of scaling them back or moving them to other states.

The fact is, ratepayers across our state are getting a raw deal for their electricity. There is tremendous room for improvement from our utilities, and it should be their job to control costs and give Michigan energy users the best deal they can.

That process starts with big utility companies making investments today that modernize our infrastructure, diversify generation to include more renewables, and leverage the latest technology to put Michigan back on track for reliable, affordable utility service for years to come. We urge our lawmakers to keep cost at the top of their list of priorities as they continue to update Michigan’s energy laws.