Michigan regulators, analysts and utility executives argue that state average industrial electricity rates don’t tell the whole story.
âThese numbers don’t make sense (numbers) when you compare across states because it doesn’t tell you what type of individual client pays,â said Julie Metty Bennett, CEO of Public Sector Consultants, a company Lansing-based consulting firm including clients DTE Energy and Consumers Energy Co. âWe really need to be more specific about benchmarking more types of clients to have a smart conversation about whether our rates are competitive or not, because the average is only an average. “
Ford said last week that the two new manufacturing complexes in Kentucky and Tennessee would use a total of 86 gigawatt hours per year of electricity, or roughly the electricity used to power 17 million homes.
DTE and other utilities may charge a lower rate for a large number of industrial users such as a battery plant because the cost of the service is lower due to the large volume of electricity, Norcia said.
âSo you’re going to be way below that 8 cents (per kilowatt hour) figure on a deal like this,â he said. “And that’s what we would have put on the table.”
Following a change in state energy law seven years ago, Michigan electricity rates are based on cost of service for each category of user – residential, commercial and industrial .
The change in law was intended to end a long-standing practice of offering so-called âeconomic developmentâ tariffs to attract new businesses to Michigan with lower electricity prices than their competitors could pay.
But following the change in law, the Michigan Public Service Commission is limited to authorizing special contracts for large industrial users that could show that their departure from a utility’s customer base would be detrimental to the rest of the customers, the President of MPSC, Dan Scripps. .
âIt really restricted our ability to give special economic development rates to try to attract a business,â Scripps told Crain’s.
In December, the commission approved a tariff case for Consumers Energy to sell electricity to Hemlock Semiconductor Corp. in Saginaw County almost at cost to power its 400-megawatt manufacturing plant after Hemlock threatened to build his own power plant. Hemlock produces polysilicon, a substance used in solar cells and semiconductor devices.
Hemlock’s special tariff is the result of a 2019 amendment to the state’s energy law that the company lobbied for. Electricity accounts for 40 percent of Hemlock Semiconductor’s costs, according to House tax agency analysis change of law.
âThis is a good example of when a customer raises their hand and wants to work constructively with the legislature, the Civil Service Commission and the public service that we can come up with really very attractive rates,â said Brian Rich, senior vice president and chief. account manager for Consumers Energy.
Special contracts are limited to consumers or existing DTE customers and not available to a new customer looking to relocate to Michigan, limiting the negative feedback utility companies could get by reducing specials. on rates for new business.
âI think their reluctance is that they have a lot of industrial customers and they would have to explain it,â Scripps said.