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Electric Rates: How Do YOU Benefit from Rates and Rate Increases?

There are a lot of misconceptions when it comes to electric rates in our state. Did you know that over the last three years Michigan was the only state in the Great Lakes region to reduce its electric rates? Or that Michigan’s industrial rates are nearly 10 percent lower than Wisconsin’s?

More important than what the rates are, though, is how they’re used — and how everyone in Michigan ultimately benefits from what we invest in our electric system.

Think about it. A lot goes into producing energy. Michigan produces a complex energy mix from a variety of sources, including natural gas, wind, hydro, and nuclear, as well as coal. It takes specialized equipment, technology, and skill to extract energy from these resources. Once produced, this energy has to travel safely and efficiently through circuits and utility poles until it reaches the right voltage as it enters your home. Electric rates help pay for not just the charge emitting from our outlet, but for the entire process from production to transmission to consumption.

WHAT’S PAID HERE, STAYS HERE

Rate payments going to Michigan energy providers are reinvested in Michigan. Just like our bridges and roads, our energy infrastructure needs to be updated and repaired. Michigan must maintain substations, transformers, and utility poles; trim back trees compromising transmission wires; and incorporate new technology to make our grid hardier and stronger for the long term. Revenues generated from consumer electric rates pay for grid improvements that translate into new construction jobs, contracts with local suppliers, and lease payments to landowners.

Michigan-based energy providers also support our communities through tax revenue. These funds go to essential services like education, healthcare, emergency services and more.

A REASONABLE INCREASE

Reasonable rate increases produce great benefits for average Michiganders. How? Increased revenue improves our energy infrastructure, ensuring we can maintain a reliable, affordable, and sustainable energy future.

Will Michiganders see their electric rates increase somewhat over the next few years? Yes, given that our state is making dramatic — and crucial — changes in how our electricity is generated and delivered. Because Michigan is a regulated market, rates are not determined by utility companies, but instead are decided by an independent state government agency, the Michigan Public Service Commission (MPSC). Energy companies make recommendations for rate changes, then must demonstrate just how the increased revenues will be used. The MPSC ultimately decides what rate increases are reasonable for industrial, residential and business consumers.

Unfortunately, in deregulated markets, this protection does not exist. Instead, advocates of deregulation will point to the free market as the mechanism to lower energy costs. As we’ve seen before, this policy has not lowered rates effectively. Rates in deregulated states clock in at 25 percent higher than in regulated markets.

Take a look at the graph below to see just how Michigan’s rates compare to our neighboring states over the last three years. Over the last three years, industrial rates in Michigan dropped 3 percent while rates went up in Ohio (2.9 percent), Illinois (2.3 percent), Indiana (1.6 percent), and Wisconsin (1.5 percent).

Same story for retail rates in the same span: down in Michigan (-0.1 percent); up in Illinois (3.6 percent), Ohio (1.9 percent), Indiana (1.6 percent), and Wisconsin (1.3 percent).

The Alliance for Michigan Power is here to demystify rates — what they are, how they’re used, and who sets them. The best news is that electric rates ultimately benefit every Michigander by improving our electric grid and securing our energy future.



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Regulated States vs. Deregulated States: How Electric Rates Compare

Deregulating energy markets seems like a good idea in theory. Competition should lead to lower rates for everyone. But it doesn’t work that way in practice. In fact, across the nation, deregulation has more often than not led to higher electric rates. Average electricity rates in deregulated states are a staggering 25 percent higher than in states that are regulated, which makes it no wonder that deregulated states also suffer lower customer satisfaction.

Rates paid to out-of-state utilities don’t benefit all Michigan consumers. They go straight into the pockets of retail providers that are more interested in their own profit than improving infrastructure and building new generation for their customers. Instead of trying to import energy from out-of-state, we should be investing in Michigan’s own energy infrastructure and our ability to produce our own power.

In November 2016, Public Sector Consultants (PSC) published a study reviewing Ohio’s experience with a deregulated market. The study found “broad success for deregulation has either not materialized or has come with other regulatory and financial costs.” One of these costs comes at the expense of consumers. Rates in deregulated markets often are more volatile, and there is little evidence these fluctuations reduce consumer costs or improve the overall consumer experience.

Another study — by the Texas Coalition for Affordable Power — states, “over the long term, Texans living in areas with retail electric deregulation are likely to have paid more for power than Texans living outside deregulation.”

Finally, a report from the American Public Power Association found deregulation doesn’t achieve the consumer savings advocates once thought it would. In fact, after 19 years of deregulation experiments in various states, rates in deregulated states are still higher, with the gap only narrowing by 1/10th of a cent. “Though the gap has narrowed in both percentage and nominal terms, the original promise of greatly reduced prices has not materialized.”

DEREG OR REG: WHICH IS THE WINNER?
Some officials in Lansing are trying to revive the deregulation debate, and often point to states like Ohio and Texas to “prove” that deregulating electric markets is a good idea. The facts, however, paint a different — and altogether less positive — picture.

Our state’s hardworking residents, businesses, and institutions should not have to pay more for electricity because of misguided policies. We need Lansing to focus on in-state energy production, creating jobs here instead of shipping them out-of-state. We can choose Michigan, strengthen our economy, and improve our energy infrastructure to protect our ability to make our own energy choices now and for the future.

Do you have a story about how deregulation negatively impacted you as an energy consumer? Let us know your story today!

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Path to a Cleaner Energy Mix: Natural Gas and the NEXUS Pipeline

AMP supports Michigan’s efforts to transition to a cleaner energy supply, and we also know how important it is to keep energy reliable and affordable for all Michiganders.

The key is maintaining a diverse mix of clean and renewable energy sources, and natural gas is an important part of that mix. Natural gas will play a key role in ensuring that Michigan has the power it needs as coal plants are shuttered across the state. Renewables like wind and solar are intermittent, meaning we can’t count on them to produce power when the sun isn’t shining and the wind isn’t blowing. These intermittent sources need to be matched up with baseload generation — like natural gas — that is always ready whenever needed.

Michigan’s geography is uniquely suited to support natural gas-based energy production. The NEXUS pipeline project will allow us to move 1.5 billion cubic feet of gas per day into Michigan from Pennsylvania and Ohio.

People understandably have questions and concerns about the pipeline: the route, the impact on the surrounding countryside, the odor (or lack of one), even bats (and other wildlife). Over the next several weeks, AMP will be looking at these concerns in more detail to help ensure our members can separate fact from fiction.

What we can sometimes forget are all of the positives the NEXUS pipeline will bring to Michigan. So in the meantime, here are just a few positive NEXUS facts you should know:

  • Expanding natural gas in our state will save Michigan families and businesses thousands of dollars per year as they transition to more reliable, less expensive, cleaner energy.
  • NEXUS will be creating more than 1,500 jobs in Michigan, generating approximately $97 million in wages that will be reinvested into the state’s economy as workers buy food, clothes, cars, and homes (and pay taxes).
  • Over the first five years of the project’s life, NEXUS will generate $22 million in local tax revenues, with $9.8 million going to school districts. Think of all the extra resources for our teachers, our police force, our seniors and our veterans that can come from that revenue.
  • NEXUS was deemed safe for the environment by the Federal Energy Regulatory Commission in November 2016.

Concerns about any energy source are to be expected, but Michigan’s energy reality is this: Coal plants are closing, and we’ll need new baseload power generation to make up for the looming power shortfall. Natural gas will be critical to a reliable, affordable, clean energy future – and we need the NEXUS pipeline to bring natural gas to Michigan.

What are your thoughts about natural gas in Michigan? Let us know!

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Michigan Summers Powered by Michigan Energy

There are few places in the country where summer is as enjoyable and enriching as right here in Michigan.  Our state’s natural beauty is on full display during those long June, July, and August days. AMP is also thinking about Michigander’s favorite summer pastimes— and how many of them just wouldn’t be the same without affordable, reliable, local energy.

Batter Up!

Summer wouldn’t be complete without a night game at the ballpark rooting for the Detroit Tigers or one of our many minor league baseball teams—along with the popcorn, hotdogs, and ice cold beverages that complete the game experience. Most stadiums today use energy-efficient, high intensity discharge (HID) lights to illuminate the field. And if you’re in the cheap seats, you can watch the action up close on the LED video scoreboard.  Michigan’s Comerica Park actually has one of the largest in the majors. 

Play It Loud

Michigan has dozens of popular outdoor music venues, and some of the biggest names in show business not only come through our cities and towns but are Michigan natives. Of course, these electrifying shows feature great sound and illuminating light shows that depend on lots of reliable, efficient Michigan energy.   You better believe one of our biggest summer concert festivals, the Electric Forest Festival in Rothbury, is powered by Michigan energy.

Cool Off and Grab Your Popcorn

Maybe you’re an indoor person—what would life on Michigan’s hottest days be without air conditioning and a wide range of indoor activities?  One great all-American way to escape the heat is to cool down in your local multiplex with a summer blockbuster in HD—often 3D—digital.  Rather stay at home? You can  curl up on the couch to catch a movie on your television, computer, or mobile device.

We All Scream for Ice Cream

Ice cream, custard, or popsicles? Enjoying frozen treats during the summer is probably among everyone’s earliest memories, and you’re never too old to enjoy it again. Did you know that one of the early pioneers of refrigeration was Detroit inventor Nathaniel B. Wales, who introduced the Kelvinator in 1914 so Americans could have ice cream and other frozen foods in their homes? Today Michigan’s energy providers help carry on his legacy.

We hope you have a blast this summer, and we hope you take a moment now and then to remember how much Michigan energy does to improve your experience.

Check out our blog post outlining nine easy energy efficiency tips so you can stay powered up and energy efficient for the summer.

Have fun!


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Celebrating Michigan’s Energy Independence

Celebrating our independence as Americans on the 4th of July reminds us how important independence is to our way of life.  For AMP, that includes energy independence.

As you prepare to celebrate Independence Day with family and friends, here’s a quick reminder of what energy independence means for Michiganders and this unique and wonderful place we call home:

1. Michigan Does Not Have to Rely on Other States For Our Power Supply
Investing in an energy-independent Michigan ensures we are able to meet our state’s own energy needs now and secure reliable energy for the future. We cannot afford to become overly dependent on energy from other states, who may be struggling to meet their own citizens’ energy needs, without making ourselves vulnerable to energy disruptions and unpredictable spikes in our energy costs.

2. Michigan Energy Means Investment in Michigan Jobs and Communities
When we support energy produced by Michiganders for Michiganders, we support tens of thousands of local jobs and businesses across the state.  We also ensure tax dollars from energy generation and distribution stay here in Michigan rather than going to communities in other states.  Those dollars fund Michigan schools, roads, health care, and emergency services, just to name a few things we all benefit from. 

3. Michigan is Able to Determine Its Own Energy Future
Late last year, Michigan legislators passed landmark energy policy that set a framework for Michigan’s energy future. Rather than having our energy solutions dictated by Washington or by what might happen in other states, Michigan has a plan that makes sense for us and the unique needs of our local communities.  We can focus on building new capacity, expanding renewable energy, and ensuring the energy needs of all Michigan consumers are met fairly and reliably, knowing that we maintain control over our energy choices.  

So this 4th of July, as part of celebrating what it means to be Americans and live in a free nation, AMP will be celebrating the steps Michigan is taking to maintain its energy independence. As the fireworks light up the sky this Tuesday, we will remember that Michigan energy lights up our economy, our jobs, and our daily lives.  

We wish you and your loved ones a safe and Happy 4th of July.

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