Michigan Still Has Not Deregulated its Monopoly Utilities

Lists of the 15 or so states that have deregulated their utility monopolies and installed consumer choice almost always include Michigan. But claims that Michigan has deregulated its utility monopolies are less credible than dentists who discourage Trident for their patients who chew gum.

Michigan state law guarantees utility companies like DTE Energy and Consumers Energy a near monopoly within their designated service areas. Yes, a small amount of consumer choice is allowed, but once 10 percent of consumers in a service area choose a different utility provider, no more consumers are allowed to escape their designated utility. Crain’s Detroit Business reports that 11,000 customers of DTE Energy and Consumers energy have lined up to purchase electricity from outside sources but cannot do so because of the 10-percent cap. The Michigan Public Services Commission reports 28 percent of Consumers Energy customers and 22 percent of DTE Energy customers would leave for other utility providers if they weren’t prevented from doing so by state law.

According to the longtime electricity business models in most states, state government designates a monopoly utility in each region of the state and electricity consumers have no choice other than to purchase electricity from the designated monopoly. During recent years, however, some states allowed consumer choice to some degree. The monopoly utilities and people who believe all goods and services should flow through government have given consumer choice a term that implicitly makes people think of dangerous risks and wild-west free-for-alls; deregulation.

Setting aside for now the issue of whether it is inherently risky and dangerous to allow consumers to choose between Nike and Reebok, Coke and Pepsi, Burger King and McDonald’s, and DTE Energy and Consumers Energy, Michigan’s asserted status as a state that has deregulated its utilities is quite curious. The U.S. Energy Information Administration and most other entities that compile lists of deregulated states have settled on a consensus list of 15 states that have deregulated. Michigan consistently appears on those lists. Yet 90 percent of Michigan electricity customers have no choice whatsoever regarding their electricity provider.

The iconic Trident sugarless chewing gum commercials of yesteryear proudly boasted that four out of five dentists recommend sugarless gum for their patients who chew gum. That 20 percent who did not were quite a small minority. And yet that small minority is twice the percentage of Michigan electricity customers who can actually choose their electric utility. Yet somehow the federal government and others who compile lists of deregulated utility states include Michigan based on that small minority.

Sorry, Michigan, but in my book – and the books of 90 percent of Michigan residents – you are still a stale, government-protected monopoly state.