Power scramble

After years of talking about electric utility deregulation, the state Senate is expected to consider legislation this week that will radically change the way power companies do business in Michigan.

Equally radical is the difference of opinion regarding who wins and who loses if the plan supported by Gov. John Engler is passed into law.

Utilities are vigorously applauding the passage last week of SB1340 by the Senate Technology and Energy Committee on a narrow 3-2 vote, moving the measure before the full Senate. The House has yet to act on the legislation.

"It's a very good deal for our customers," says James Connelly, manager of regional relations for Detroit Edison.

But, with the exception of Consumers Power, the state's other big electric utility, it's difficult finding anyone else who shares their enthusiasm for the bill, which would eventually allow all consumers to choose whom they buy electricity from. Lined up in opposition is just about every interest with a stake in the outcome: environmentalists, public health advocates, consumer groups and business interests both large and small.

Reasons for opposing the legislation are as varied as the groups fighting against it.

Environmentalists and public health advocates have long decried the fact that the bill, SB1340, will lead to an increase of both pollution and the illnesses that accompany it. Critics in this camp warn that the legislation lacks necessary environmental protections, such as measures requiring that some power be derived from renewable resources. These critics also say customers should be informed of how their electricity is being generated so that they will be able to select providers selling "cleaner" electricity.

"Without these safeguards, electric industry restructuring will mean the restart of old, dirty power plants and the purchase of 'cheap' electricity from dirty coal plants in neighboring states," cautions Elliot Levinsohn, air quality specialist for the American Lung Association of Michigan.

Opponents also question the legislation's timing.

"Polluters and their lobbyists are pushing the lame-duck Legislature to break 100 years of utility regulation in less than six weeks," complains Dave Dempsey of the Michigan Environmental Council. "Ramming this bill through against massive objections in one seven-hour hearing-- hastily called and jammed with lobbyists -- is not democracy. It is an abuse of power."

The legislation is supported by Gov. John Engler, even though it is opposed by most of his usual business allies. What has that contingent worked up is the stipulation that rates will be frozen for three years.

"Every year taxes go up. Medical costs go up. To guarantee rates won't be going up is pretty good considering the economic environment we live in. It's a risk we are taking," says Edison's Connelly.

But, according to a Michigan Chamber of Commerce report released last week, the likelihood is that rates nationwide should decrease in the next several years as the cost of coal and other fuels used to generate electricity come down.

But there's more. Starting in January of next year, Detroit Edison is slated to begin reducing rates to the tune of $170 million, which was collected at an accelerated rate during the past decade to pay for enormous cost overruns at the Fermi II nuclear plant in Monroe.

If the planned freeze goes into effect -- using as a benchmark the rate being charged Nov. 1 of this year -- Edison customers will lose that money "right off the top," says Rick Gamber, executive director of the Michigan Consumer Federation. Gamber predicts that the proposed legislation will cost consumers as much as $500 million if it is passed into law.

"It's absolutely horrible," says Gamber, who makes note of the strange-bedfellows opposition this bill has created. "For once we're on the same side of an issue as the Chamber of Commerce. I keep telling people that anytime we're both in agreement on something like this, people better take notice of what we're saying, because there has to be some truth to it."