WHO WILL PAY MORE? Michigan Electricity Part II

Futlon Sheen commenting on the passage and explains his NAY vote:

“Mr. Speaker and members of the House:

I cannot support House Bill 5524 and SB 213. These bills will drive up the cost for both consumers and Michigan Business. This bill will reduce competition to 10%, and give Consumers Power and Detroit Edison a guaranteed customer base of 90%, which by any measure is a virtual monopoly. It also mandates that 10% of our energy must be produced by renewable energy sources by 2020, and will add an additional charge on every Michigan citizen, business, and industrial user’s bill.

In a free enterprise system if someone wants to start a new business, build a new facility, or advance a new product line; they send out a venture capital, stock and bond offering inquiry to see if there is interest and support. If there is sufficient interest and support they get their venture capital, sell the stock and bonds, and they start the business, build the facility, and put the new line into production. That is how our entire capitalistic system works and has made America the greatest economic power in the world. This system should not be applied to one industry, but not another, it should apply to all industries equally. Consumers and DTE are great companies but why should the state of Michigan have to promise them anything, when they can do the same thing that every other private company does to raises capitol to build a new facility which will generate a profit.

These bills limit consumer and business choice, create costly and unrealistic mandates, and monopolize Michigan’s electric system, all of which will drive up electrical costs. Government should not pick winners and losers, they should not pick one energy company over another, and they should stay out of the market place!

For these reasons, I will not support the proposed energy bills.”

He is correct.  And acting on PRINCIPLE, a rarety in the Michigan legislature it seems, he and Jack Hoogendyk, and a few others voted to not allow this obvious setback of Michigan energy policy. What Michigan government has done is raised the cost on Michigan residents when they are already reeling from higher fuel and heating costs.

And though some say BUSINESS will receive some advantage in electrical rates, it is all just a matter of reshuffling the deck, and a little sleight of hand.  PEOPLE will pay more.  You, Me, and anyone who lives in or vacations here.  Business paying less? Not likely.  When you add the pay raise requests of the employees who all of a sudden are facing an extra $20 or more a month in electric rates per household, it all plays in the double dealt hand we have gotten from the bottom of the deck. Proponents have said the electric rates will “only” increase $6.50 a month for the average homeowner who pays $75 as month.   Yes..  The average home owner who has CNG water heat, Stove, and goes to bed at 8pm.

Gratuitous Friedman Quote:

“Monopolies come from many sources, but direct and indirect government intervention is the most common, and it should be stopped wherever possible.”

Arguably, the most economically astute man who has ever lived.

Monopolies exist, but for a short time..  unless they are institutionalized by government.  Free markets allow the challenge of emerging companies to break the monopolies by bringing a similar product to market in newer and more efficient ways.  In this case, if wind, solar or other renewable electricity producing products can be brought as an efficient alternative to the current production set, then they would prosper on their own.  The mandate as determined by those who have little understanding of how markets work or even the scientific basis of the production of electricity leaves us with law designed to protect inefficiency of the large energy concerns while they attempt to proceed in the path they had already started down on.

IN OTHER WORDS..  It was critical to Consumers and DTE that this legislation be passed, as they already would be planning rebuilding, restructuring, and ( presumably ) innovating.  Now they have breathing room, and can afford to be inefficient.  NOW, they can proceed as planned but have the risks assumed by the citizens of MICHIGAN.

4 comments for “WHO WILL PAY MORE? Michigan Electricity Part II

  1. September 23, 2008 at 8:30 am

    The monopoly issue is the biggest problem with this entire flawed package… you hit the nail on the head when you talked about how it incentivizes Consumers and DTE to be inefficient and lazy.

    No competition, no pressure, no change.

    BAD policy. BAD legislation. BAD move. And Michigan families are again left holding the bag for Lansing.


  2. September 23, 2008 at 8:51 am

    Outstanding articles on this ill-advised re-monopolization of our energy market in Michigan. Thank you for helping shine the light on this issue, which will only serve to drive up energy prices, driving more residents and busineses from our state.

  3. Richard Schneider
    September 23, 2008 at 9:08 am

    Jason, thanks for your perspective on this. What can we do? It is like this current “bailout” in Washington. I can see the punch coming in slow motion and all I expect is pain.
    I don’t think I am much different than a lot of voters, we need to clean house. I am guessing a lot of incumbents will be wondering what happened? I hope so, especially Levin.

  4. jgillman
    September 23, 2008 at 10:50 pm

    Be active I suppose. I have a full time job (business) and am fortunate my children are now grown. But, one person can do very little if there aren’t any others doing anything.

    Perhaps commenting on stories such as this are part of the solution. Keeping the the story alive is maybe the best we can do till we have the opportunity to find real leadership. One thing I have noticed is people seem to have short memories, or society has a little A.D.D.

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