Consumers Energy Announces Opposition to Legislation to Amend 2008 Energy Law and Raise Electric Bills for Most Customers by Up to $405 Million a Year by 2016

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Mar 20, 2012, 01:00 ET

JACKSON, Mich., March 20, 2012 /PRNewswire/ -- Consumers Energy announced today that it opposes legislation that would amend the 2008 energy law to benefit a handful of business customers and force the rest of the utility's electric customers to pay up to $405 million more per year by 2016.

The utility's residential customers would be the biggest losers under the bill proposed by Rep. Mike Shirkey, R-Clarklake. They would pay up to $218 million more per year by 2016. That would be about a 14 percent increase in their electric bills.

Customers in Jackson County -- which makes up most of Shirkey's district -- would be hit hard by his bill and be forced to pay up to $35 million more per year by 2016.

Statewide, Shirkey's bill could mean nearly $900 million in bill increases by 2016 for the vast majority of Michigan's electric customers, primarily families and small businesses

"We are extremely disappointed that Rep. Shirkey wants to gut the part of the 2008 energy law that protects our 1.8 million electric customers from the large-scale cost shifting that would take place under his legislation," said David Mengebier, the senior vice president of governmental and public affairs for Consumers Energy.

Shirkey's bill would attack the provision in the 2008 energy law that sets aside 10 percent of the state's electric market to be served by out-of-state power marketers. The Shirkey bill would phase out the cap and start that process by increasing the cap to about 20 percent immediately.

Initially, that would shift up to $150 million in fixed costs to the remaining Consumers Energy customers. About $13 million of that increase would hit Jackson County customers. The handful of businesses in Jackson County expected to benefit from the initial cap increase in the bill would save an estimated $3.1 million.

Under the existing market conditions, the Shirkey bill would allow the out-of-state power brokers to take about 38 percent of the state's energy market by 2016 and then continue to phase out the cap. Phasing out the cap to favor the out-of-state power marketers would shift more fixed costs to the remaining utility customers.

"The Shirkey bill would create a handful of winners and the rest of our 1.8 million electric customers would be losers. That is patently unfair. This component of the 2008 energy law was designed to protect customers and the Shirkey bill would eliminate that protection and create a policy that's unfair to nearly all of our customers and force them to pay higher electric bills," Mengebier said.

The fixed costs reflect the long-term investments that Consumers Energy has made in its Michigan power plants and the long-term contracts it has to buy electricity from Michigan power plants owned by other companies, he said, adding those plants provide hundreds of jobs and are major taxpayers.

Mengebier pointed out that Consumers Energy's electric rates are about at the national average and the utility has the lowest overhead costs in the industry.

"We're working hard every day to provide our customers with a good energy value. We've been aggressive about managing our operations and maintenance costs and plan to reduce them by 4 percent this year and then 1 percent a year through 2016. Our business plan calls for holding base rate increases to the rate of inflation or less for the next five years," Mengebier said.

Consumers Energy plans to invest $6.6 billion in its utility operations over the next five years, making it one of the largest investors in the state of Michigan. Those investments create jobs and help improve the state's economy.

For example, Consumers Energy is creating about 2,000 jobs with a $1.6 billion environmental program to further reduce emissions from its five major coal-fired units.

The company also is one of the state's largest employers with a workforce of 7,500 and it also supports about 7,500 contractor jobs. It's also one of the largest taxpayers in the state, paying about $400 million a year in state and local taxes. It also creates jobs in Michigan by purchasing about $2 billion a year in goods and services from other businesses in the state. Last year, Consumers Energy made a commitment to increase that by $250 million over the next five years through the Pure Michigan Business Connect initiative.

Mengebier noted the state Senate Energy and Technology Committee conducted six weeks of hearings last fall on the performance of the 2008 energy laws. After hearing testimony from more than 60 witnesses, the committee chairman, Sen. Mike Nofs, stated publicly that the 2008 energy law was performing well and there was no need to set aside more of Michigan's market for out-of-state power brokers.

As it exists today, the 2008 energy law provides the financial certainty that Michigan's hometown energy providers, such as Consumers Energy, need to make substantial investments to serve customers and improve the environment.

Policymakers spent nearly two years researching, discussing, and developing the 2008 energy law. The resulting legislative package attracted strong bipartisan support in the Michigan House and Senate and was approved in both chambers by overwhelming margins. It was signed into law in October 2008 and has provided a number of benefits to Michigan families and businesses.

For example, Consumers Energy customers saved $67 million in the first two years of the energy efficiency program the utility launched to help it meet standards set in the law.

The law's 10 percent renewable energy standard has encouraged job-creating investments and the development of a variety of new renewable energy sources, primarily wind.

Consumers Energy plans to invest $500 million to build two wind farms. Construction began last fall on the company's first wind farm, the 100-megawatt Lake Winds Energy Park, and it is scheduled to begin serving customers later this year. The 150-megawatt Cross Winds Energy Park is expected to begin serving customers in 2015.

The utility also has signed contracts with other companies that will make major job-creating investments in Michigan to build another 300 megawatts of renewable energy sources.

Consumers Energy, the principal subsidiary of CMS Energy (NYSE: CMS), provides natural gas and electricity to 6.8 million of Michigan's 10 million residents in all 68 Lower Peninsula counties.

For more information about Consumers Energy, visit our Website at www.consumersenergy.com

SOURCE Consumers Energy