Protect Michigan News & Views November/December 1999
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News
& Views |
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Vol. 2 No. 1 |
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November/December 1999 |
Supreme Court Pulls Plug on MPSC Deregulation
Orders
On June 29, 1999, a deeply divided Michigan Supreme Court declared
that the Michigan Public Service Commission (MPSC) "lacked
the authority" to deregulate the state's electric utility
industry. At the time, the decision had the effect of virtually
nullifying everything the MPSC had done over the previous 2.5
years to implement a deregulation program in the state.
Though the Court's Opinion would normally have caused deregulation
to come to a standstill and placed the whole issue back at "square
one" (located just outside the State Capitol Building),
the consequences of the Court's decision
were themselves nullified by subsequent events. This "complete
turnaround" occurred because the Court's decision "indirectly"
opened another option for bringing about deregulation. Specifically,
that Detroit Edison and Consumers
Energy could "voluntarily agree" to abide by the MPSC's
Deregulation Orders. They didn't have to . . . but if they wanted
to, it was their choice and there would/could be no basis for
further judicial review.
Though it surprised many at the time, that's exactly what both
utilities did. As a result, by mid-August deregulation implementation
was back on track with the MPSC's phase-in schedule. (See "Chronology
of Recent Events")
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Targeted In This Issue:
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Legislature's Back
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What's On Tap? |
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 In June 1999, members
of the Michigan House and Senate introduced a set of "three
separate bills" (HB 4789-4791, SB 642-644) dealing with
deregulation of the electrical utility industry. It should be
noted, however, that the bills are identical in each chamber
and are tie barred (must all be passed) for the purpose of enactment.
Also, calling the bills "separate" is clearly misleading.
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"Some "high visibility"
issues are not mentioned at all. These include (among others)
reciprocity, reliability standards, Michigan ISO, and worker
protections, retraining, and working conditions." |
(1) While each bill does contain provisions referring to different
aspects of the deregulation process, they are "tightly sewn
together" in wording and in cross-references.
(2) Indeed, the sections in each bill are not even numbered consecutively
nor is there any intrinsic logic to their grouping.
(3) Only when the sections in all the bills are placed in numerical
sequence, does the breadth of the changes to be enacted become
clear.
These three-bill packages propose many substantial changes in
the way both the electrical industry and the Public Service Commission
will operate in the 21st Century. The bills' 25 new sections
cover many but not all of the "high visibility" issues
related to deregulation: stranded costs, transition charges,
true-up adjustments, regional transmission authority, consumer
protections, expanded MPSC authority and responsibilities, time
tables, and
standards with expressly stated sanctions and dollar-specific
penalties for failure to adhere. However, it should also be noted
that some of these high visibility issues are significantly different
and potentially detrimental
compared to the MPSC's orders and the changes supported by Protect
Michigan.Perhaps the most reyvealing aspect of the bills is the
fact that, while they contain proposals for the most sweeping
changes in the electrical utility industry in nearly a century,
they propose no changes in the state's current
90-year-old public utility law! Rather, they propose only to
add substantial language to a portion of the current statute.
In 1988 the Michigan Supreme Court declared that the state's
public utility laws were a "statutory jungle" and required
a major overhaul by the Legislature. In the intervening years,
not one change has been made. While adding 25 new sections sounds
like "adding another coat of paint," the end results
are not the same. Painting over an old coat of paint ends up
with only the new color visible. Adding another layer of statutes
(especially as sweeping as deregulation) is more like adding
another "jungle" on top of the already existing one
. . . ] (Anyone got a machete?)
In June the bills were moved to the respective House and Senate
committees with primary responsibility for public utility legislation.
However, nothing further occurred prior to the Legislature's
adjournment for the summer.
During last summer's events, it first appeared that deregulation
would again be in the Legislature's bailiwick. However, the voluntary
agreements from Consumers Energy and Detroit Edison resulted
in reversing the effects of the
Court's decision and keeping the MPSC's plans moving forward.
Nevertheless, it was still expected that there would be a significant
effort to foster some deregulation legislation this fall with
the likelihood that these bills or
something similar would be moved to the active agenda. However,
as of the end of October 1999, the bills remained in their respective
committees without any further action scheduled.
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From the President
Protect Michigan was created in November of 1996, to address
the economic and social costs of utility
deregulation in Michigan. Since then, it has made itself one
of the most influential lobbying groups on utility deregulation
in Michigan. The fact that our coalition comprises the largest
number of laborand business organizations directly involved in
the utility industry has given us credibility in the legislative
arena.
Our newsletter is widely circulated and our web site registers
a continuous flow of visitors when deregulation issues are being
considered.
We have adopted a policy of serious deliberation when it comes
to any deregulation proposals whether they have come from the
Governor's office, the Legislature or the Public Service Commission.
We want to ensure that when
utility deregulation becomes a reality in Michigan, it will provide
acomprehensive, positive economic benefit for all of Michigan's
citizens. Without a careful, well-crafted plan, thousands of
energy workers' jobs could be eliminated and Michigan's residential
and small business customers would be paying higher energy prices.
Although a package of bills, with a comprehensive set of proposals
to implement deregulation, has been introduced in both chambers
none of them have been enacted. These bills contain substantial
and detrimental differences when compared with the Michigan Public
Service Commission orders and most definitely
when compared with Protect Michigan's legislative priorities.
However, as of the end of October,
these bills remain in committee and are not scheduled for hearings
at this time.
I want to express my appreciation to the many people who have
contributed their time and resources to Protect Michigan. What
this organization has become today is primarily due to the combined
output of a lot of people who
have other jobs but take the time and make the effort to do the
work of Protect Michigan. Also deserving of our gratitude are
the many organizations that have contributed resources and other
forms of support when we have needed additional help to get over
the hump.
On behalf of the officers and members of Protect Michigan, I
would also like to acknowledge the outstanding work that was
done for the past three years by our former President, Bob Lee
and our former Treasurer, Gary Ruffner. Bob retired from his
position as Secretary-Treasurer of the Michigan State Building
and Construction Trades Council and Gary Ruffner is now the Secretary-Treasurer
of the Utility Workers Union of America and has moved to Washington
D.C. Both of these men helped make Protect Michigan the organization
it is today. Our job is to continue to reach the goals they helped
us to set. Good luck to both of them in all their endeavors!
Tom Boensch
"We want to ensure that when utility deregulation becomes
a reality in Michigan, it will provide a comprehensive, positive
economic benefit for all Michigan citizens"
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What is Protect
Michigan?
Protect Michigan is a broad-based coalition of labor unions,
business organizations and other interest groups dedicated to
providing information about the true economic and social costs
of Utility Deregulation.
The members of Protect Michigan are employees and employers from
a wide spectrum of Michigan's public and private sectors. We
are utility workers, skilled trades construction workers, construction
contractors, and others concerned with the economic health of
Michigan and the electric utility industry in particular.
Protect Michigan's perspective is that a deficiently designed
plan for deregulating Michigan's utility industry could destroy
entire sectors of the Michigan economy and that all of us have
an obligation to protect Michigan against these kinds of economic
disasters.
We all share the view that Utility Deregulation is a reality
that must be developed with the objective of providing a comprehensive,
positive economic benefit for all. Without a carefully thought
out and well-crafted plan, Protect
Michigan is fearful of a precipitous deregulation process which
could result in bankrupting entire school districts, eliminating
thousands of energy workers' jobs and costing residential and
small business customers millions of dollars due to higher energy
prices.
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Protect Michigan
Supports
- A multi-year phase in before complete deregulation and
unrestricted customer choice occur.
- The concept that all classes of rate payers (industrial,
commercial, and residential) are given an equal opportunity to
benefit from direct access during the transition period.
- The adequate reimbursement of substantial stranded costs
to the utility industry and its affected employees.
- The establishment of an ISO (Independent System Operator)
to be managed by an independent public agency run by an appointed
Board of Directors.
- Michigan having its own ISO and that the Legislature needs
to be responsible for the appointment of the ISO Board of Directors.
- A strong reciprocity requirement that all states open
their markets. Michigan's utilities need the assurance that they
will be able to compete on a level playing field -- not only
in Michigan but also in the other states as well. This item is
critical if we expect Michigan-based utilities to have any chance
of surviving the shift to afully competitive marketplace.
- The requirements that there be adequate provisions made
for retraining, relocation, and alternative employment opportunities
for workers in the industry whose employment is terminated as
a result of restructuring and deregulation.
Efforts to provide these benefits should be carried out in coordination
with the affected workers'
organizations whose members' jobs are at risk due to deregulation
actions by the Legislature and MPSC.
- The continuation of a safe and reliable electrical delivery
system.
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 Protect Michigan is Moving to Its Own Website
For Protect Michigan, one of our most important purposes has
been to keep our members, and the workers and contractors they
represent, fully informed and up to date. Therefore, Protect
Michigan is establishing its own website.
"But we already have one. Don't we?"
Although we've been on the Web since early in 1997, it's not
at Protect Michigan's web address. Our current site (See "Sites
to See") was created as a link from the personal website
of PM's former Treasurer, Gary Ruffner, and, therefore, anyone
surfing the net or putting PM's name into a search engine is
not able to locate us. Although the Board was aware of this at
the time, it felt the arrangement was satisfactory since (1)
the site would only be "temporary," (2) was expected
to be used only by our members and, (3) the address was published
in our newsletters.
However, at its September meeting, the Board came to the obvious
conclusion: 2.5 years is "temporary" enough! Protect
Michigan is changing and, whether we like it or not, our website
is seen as our "public image." That being the case,
as soon as we get beyond the "This Site Under Construction"
mode, we're inviting everyone over to "our place" to
see our "new look."
Major Changes in Store
Along with establishing our own site, we're also making a number
of major changes. For one, because we know that "no one
can really understand what's going on unless he or she speaks
the language," we're devoting one section specifically to
the basics of the EUI and deregulation.
Another section will be strictly limited to reporting on the
actions of the Legislature, the MPSC, judicial decisions, the
FERC, and/or Congress. And, because we feel it's also vitally
important for our members to know PM's position on these efforts
and activities, we'll also be including our own perspectives
and analyses.
Of course, we won't forget the "information junkies"
who have always been mainstays since, right from the beginning,
our site was linked to anywhere and anything with the word(s)
"electrical," "utility," and/or "deregulation"
somewhere in it! But these links are also necessary for anyone
wanting to become more broadly informed and/or up to date. So,
we're keeping the links and we'll add more if they offer something
useful or different.
Finally, and as best we can, we're going to incorporate some
of the latest options for enhancing a website such as interactive
displays, audio/visual materials, and an e-mail exchange. We
think this combination of new and old will be both informative
and entertaining as well as get PM's views on the issues more
widely distributed and better understood.
Since, at present, our site's still "under construction,"
if you have a suggestion, call newsletter editor Mark Phillips
at (517) 372-3376 or fax him at (517) 372-4313.
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Sites to See on
the Internet
Many people want to learn more for themselves and /or
keep up on issues like deregulation, state/federal legislative
bills, technological changes and the like. The best way to
do this (in most instances the only way) is to get on the
internet and surf But surf with a purpose. If you're not
sure where to go or what you want to see, Protect
Michigan is happy to share a few of the names and
addresses from our little black book.
PROTECT MICHIGAN WEBSITE:
http://members.aol.com/protmich/frame.html
(Note: This site contains links to all other sites)
Utilities
Detroit Edison
http://www.detroitedison.com
Consumers Energy
http://www.consumersenergy.com
MCN Energy Group
http:www.mcnenergy.com
Michigan Consolidated Gas
http://michcon.com
(Note: Michigan Consolidated Gas is part of
MCN Energy, which is now part of DTE)
Information & Research
Edison Electric Institute (EEI)
http://www.eei.org
Electric Power Research Institute (EPRI)
http://www.epri.com
Institute for Public Utilities (IPU)
http://www.bus.msu.edu/ipu
(Located at Michigan State University)
Gas Research Institute
http://www.gri.org
Federal Government
Federal Energy Regulatory Commission (FERC)
http://www.ferc.fed.us
Department of Energy (DOE)
http://www.doe.gov
National Association of Regulatory Commissioners (NARUC)
http://www.naruc.org
North American Electric Reliability Council (NERC)
http://www.nerc.com
Michigan Government
Michigan Public Service Commission
http://ermisweb.cis.state.mi.us/mpsc/
electric/restruct
Michigan Legislature
http://MichiganLegislature.org
Unions
Utility Workers Union of America (UWUA)
http://www.uwua.org
International Brotherhood of Electrical Workers (IBEW)
http://www.ibew.org
Michigan State Utility Workers Council
http://www.msuwc.org
Utility Workers Union of America
Local 223, AFL-CIO
http://www.greatlakes.net/local223.htm
Michigan State AFL-CIO
http://www.miaflcio.org
Service Employees International Union,
AFL-CIO
http://www.seiu.org
Michigan State Building and
Construction Trades Council
http://www.mibldgtrds.org
Other Sites to Visit
Michigan Electric Cooperative Association
http://www.countrylines.com
National Rural Electric Cooperative Association
http://www.nreca.org
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Chronology of
Recent Events
In the Beginning
In 1992 the Association of Businesses Advocating Tariff Equity
(ABATE) sought the MPSC's approval to begin an experimental program
allowing a customer to purchase electricity from a supplier other
than the local utility. However, the local utility refused to
allow the other supplier to use its transmission lines. In June
1995, the MPSC ordered the utility to make its lines available
to the "third-party provider."
Detroit Edison, Dow Chemical, Consumers Energy, and ABATE appealed
the MPSC's order to the Michigan Court of Appeals alleging that
the MPSC did not have the authority to order a local utility
to open its transmission lines to another supplier.
On June 29, 1999, the Michigan Supreme Court agreed with the
Utilities.
(See "Supreme Court
Pulls Plug on MPSC Deregulation Orders.")
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Deregulation in Michigan
June 1997 - March 1999
On June 5, 1997, the MPSC issued an order for restructuring the
electric utility industry in Michigan. The order included specific
implementation procedures, dates, timetables, and standards to
be followed. It also dealt with issues such as stranded costs,
securitization, unbundling of services, and reciprocity. The
order is usually considered the initial date of
restructuring/deregulation in Michigan.
During the following 21 months, the Commission issued a stream
of orders dealing with every aspect of restructuring/deregulation.
On March 8, 1999, the Commission issued what it considered "its
last order to implement
restructuring/deregulation."
June 1999 - Comprehensive Set of Deregulation Bills Introduced
On June 10-11, 1999, House Bills 4789, 4790, 4791 and Senate
Bills 642, 643, 644 were introduced in the Legislature. The sets
of bills were identical with each bill containing some portion
of 25 sections to be added to the current law. In all, the bills'
proposals clearly constituted a comprehensive deregulation plan
significantly different from the one being implemented by the
MPSC. (See "Legislature's
Back - What's On Tap?")
June 29, 1999 Michigan Supreme Court Decision
On June 29, 1999 the Michigan Supreme Court declared that the
MPSC "lacked the authority" to deregulate the state's
electric utility industry. (See "Supreme
Court Pulls Plug on MPSC's Deregulation Orders")
July 1999 - "Back to Square One?"
While "back to square one" was the "conventional
thinking" on July 1, this point of view -- like most about
deregulation -- had a very short half-life. On July 2, 1999,
both Detroit Edison and Consumers Energy publicly announced that
they intended
to "voluntarily abide" by MPSC's deregulation orders.
August 1999 - CE and DE Make Presentations To Interested Suppliers
Consumers Energy and Detroit Edison both submitted letters to
the MPSC confirming their intentions to continue with the MPSC's
deregulation plans. During the month, both utilities also held
all-day workshops for over 200 prospective "third-party
providers" to explain, answer questions, and give advice
on becoming "alternative electric suppliers."
September 1999 - LEG Reconvenes. Bids Submitted and Awarded
On September 21 the fall legislative session began with heightened
expectations that there would be a flurry of bills regarding
deregulation. However, at the end of October, there had been
no new bills nor had hearings been scheduled on the earlier bills.
Meanwhile, both Consumers Energy and Detroit Edison accepted
bids from all qualified applicants seeking to become alternative
electric suppliers. Awards were announced on the 30th of September.
(See CE or DE websites)
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News
& Views
is a publication of Protect Michigan
Tom Boensch, President
Mark Phillips, Editor
Protect Michigan 1026 N. Washington
Lansing, MI 48906
Phone: (517) 372-3080
Fax: (517) 372-4313
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