Michigan

Restructuring Overview  | Public Benefits  |  Restructuring Resources  |  Consumer Protection

Legislation Passed
Electric Y Gas N

2000, SB 937; The Customer Choice and Electricity Reliability Act

2000, SB 1253; Securitization Legislation

Electric
Overview

• 2001: The Michigan customer choice law provided for customer choice by January 2001 and a 5% rate cut until 2003. It also requires the Michigan Public Service Commission to adopt consumer education and protection programs and certain public benefits programs.
• 2002: In its annual report on the Status of Electric Competition, the PSC noted that over 3,200 customers were participating in Michigan’s retail open access program (ROA), an increase of 30 percent over 2000 totals and that 15 alternative electric suppliers had been licensed. The PSC made no recommendations for legislation in the report because 2002 is the first year of fully open ROA markets. If the Michigan ROA market fails to fully develop, the PSC may recommend additional legislative remedies.
• April 2003 – The PSC ordered the state’s investor-owned utilities to drop monthly customer fees that have been charged since January 2002 for a customer-choice education program. Because there is no residential competition in the state, the education program was never initiated. The companies have until August 2003 to tell the PSC how they plan to use monies already collected to promote green power or refund the money to their customers.
• July 2003: The Michigan Public Service Commission cuts in half a planned securitization by Consumers Energy. Securitization allows utilities that are being restructured to receive full or partial stranded cost recovery, usually through a "customer transition charge" or other "non-bypassable" fee tacked on to customers’ electricity bills. The commission authorized the utility to sell up to $554 million of bonds backed this special fee, instead of the $1.1 billion the utility had originally sought. The fees backing the bonds will remain in place for as long as 15 years.

Choice Status

• Since January 1, 2002, all customers of investor-owned utilities have been free to select a new electric supplier or retain full service from their current utility under regulated rates. As of September 2003, there are no suppliers offering choice to electric residential customers in Michigan.

Natural Gas

• Since January 1, 2002, all customers of investor-owned utilities have been free to select a new electric supplier or retain full service from their current utility under regulated rates. As of September 2003, there are no suppliers offering choice to electric residential customers in Michigan.

Overview

• On October 24, 2000 the Michigan Public Service Commission (PSC) approved a permanent gas customer choice program for Consumers Energy Company's natural gas customers. The program replaces CEC's three-year pilot program, which allowed up to 300,000 customers to participate in 2000.
• In February 2002, the PSC approved a permanent gas customer choice program for Michigan Gas Utilities' (Aquila Networks - MGU) natural gas customers, effective June 1, 2002. The program will be phased in over the next three years with retail choice available to all customers by June 1, 2005.
  

Choice Status

• Beginning April 1, 2001, up to 600,000 Consumer Energy natural gas customers became eligible to participate in the program on a first-come, first-served basis. Effective April 1, 2002, up to 900,000 customers will be eligible, and all gas customers will be able to participate on April 1, 2003. On April 1, 2002, up to 400,00 Michigan Consolidated Gas customers will become eligible for customer choice; that number rises to 600,000+ on April 1, 2003.
• As of August 2002, more than 177,877 Michigan residential customers were participating in natural gas customer choice programs.

Choice education
Consumer alert -- electric restructuring
www.cis.state.mi.us/mpsc/execsec/alerts/changes.htm
This one-page alert provides a "snapshot" of electric restructuring in Michigan, including applicable rates cuts and some consumer protections. It provides a link to most extensive information on the state Public Service Commission website.

Michigan Electric Utility Restructuring
www.cis.state.mi.us/mpsc/electric/restruct/
This fairly technical state website contains links to Public Service Commission documents on restructuring, utility implementation plans, information for electric suppliers, and other state and federal restructuring sites.

Consumer alert -- natural gas choice
www.michigan.gov/documents/naturalgaschoice_76037_7.pdf
This one-page alert provides a "snapshot" of natural gas customer choice in Michigan, including a list of suggested questions to ask suppliers offering service to residential customers. It provides a link to most extensive information on the state Public Service Commission website.

Suppliers
Electricity suppliers
www.cis.state.mi.us/mpsc/electric/restruct/esp/

Gas suppliers
www.cis.state.mi.us/mpsc/gas/choicesup.htm

Public Benefits

The Michigan restructuring law authorized creation of a low-income and energy efficiency fund, funded through savings from utility securitization. Starting in 2001, the fund will accrue about $10 million annually for six years, to be distributed among energy efficiency, renewable energy, and low-income programs. The Michigan Public Service Commission has approved $27 million for low-income rate assistance during 2002, and will select energy efficiency programs later in the year through the RFP process. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation - buying coops

• Local units of government, public and private schools, universities, and community colleges may aggregate to purchase electricity for themselves or for customers within their boundaries with the written consent of each customer aggregated. Customers within a local unit of government have the right to choose their electricity supplier and are not required to purchase electricity through the aggregator.
  

State Restructuring Resources

• State-regulated utilities must provide winter protection programs that help low-income and senior citizens avoid disconnection and high utility bill payments from December through March.
• Utilities must delay disconnection of residential service for up to 21 days if a physicians or other public health official certifies that disconnection would adversely affect the health of a household member.
• Senior citizens cannot be disconnected during the winter, nor can low-income customers who pay a monthly amount equal to 7% of their annual bill.
• An electricity supplier can disconnect residential service if the customer is: 1) living with someone who owes the company money for service at the same or a previous location (if the customer was living with that person at the other location); 2) not paying a past-due bill or not living up to a settlement agreement; 3) not paying a cash deposit or other guarantee for service; 4) tampering with service or utility equipment; 4) denying access to a service person to read the meter, inspect, or repair utility equipment; and/or 5) using a false name to get service.
• Before disconnection, the company must send written notice and try to contact the customer by phone, in person or leave a notice. This notice tells the customer that shut off will occur by the next business day between 8 a.m. and 4 p.m. After shutting off service, the company employee also leaves a notice, Service is restored after the customer pays the bill and any deposits and reconnect fees or makes arrangements to pay the bill. Service should be restored the same day or within 24 hours.

Deferred payments

• Utilities must inform customers of any programs available to help them pay their utility bills. They must offer customers a chance to pay their bills in smaller payments if they have a financial emergency and offer a bill payment plan to senior citizens and low-income customers to avoid utility service shut offs in the winter.

Customer service

• Utilities must prepare and distribute a pamphlet containing the following information: billing procedures and estimation standards; methods for customers to verify billing accuracy; an explanation of the power supply cost recovery or gas cost recovery program; customer payment standards and procedures; security deposit and guarantee standards; shut off and restoration of service; and inquiry, service, and complaint procedures.
• Utilities must send a copy of the information pamphlet to all new customers and display it prominently at all utility office locations open to the general public. If there are any major changes in customer service, utilities must send an updated version of the pamphlet to all customers.
• Utilities must ensure that qualified personnel are available and prepared at all times during normal business hours to respond to all customer inquiries, service requests, and complaints. Customers who are unable to communicate in English must also receive prompt assistance. Qualified personnel must be available at all times to respond to customer contacts regarding any shut off of service and emergency conditions.

Deposits/fees

• Utilities may require a deposit from a new customer if he/she: 1) has a delinquent bill with any electric or gas provider from the last 6 years; 2) misrepresents identity or credit standing; 3) fails to provide complete identification information when applying for new service; 4) used, diverted, or interfered with the service of the utility within the last 6 years; 5) requests service for a location at which he/she does not reside; 6) resided with a household member during a period in which the other person accrued all or part of a delinquent service account if that household member currently resides with the applicant, and if the account remains unpaid; and/or 7) is unable to provide prior utility service history information with any regulated or unregulated utility in Michigan or elsewhere during the last 6 years and has an commercial credit rating caused by 3 or more delinquent payments of more than 60 days in the last 2 years.
• Utilities cannot require a deposit as a condition of providing service to a new customer if: 1) an agency is responsible for making monthly payments to a utility on behalf of the applicant; 2) the applicant secures a guarantor who is a utility customer in good standing with the utility; and/or 3) the applicant is over 65 years old and has no negative credit history with any gas or electric provider.

Right to cancel

• Customers may switch to electric choice service for a time and then return to the regulated utility company. If they do switch back to the regulated utility company, they must remain with that utility company for at least 12 months.

Billing and collections

• Regulated natural gas and electric companies must 1) give customers 21 days to pay their bills; 2) promptly and courteously handle customer questions, requests for service or problems; and 3) allow a hearing for customers when other attempts to resolve a problem have failed;

Supplier licensing

• An alternate electric supplier must: 1) provide the Commission with detailed information, including its business name and address, telephone number, and 24-hour customer contact name and number; 2) verify any authorization required by the Federal Energy Regulatory Commission; 3) demonstrate it has the necessary technical, financial, and managerial capabilities to ensure adequate service to Michigan customers; and 4) comply with MPSC winter protection rules.

Slamming/cramming

• Customers may authorize switching of their electric service provider through written authorization, a call to a toll-free telephone number voice response unit, a Web-based connection, notice to an appropriately qualified third party, or a three-way call between the new supplier, the customer, and the older supplier. New suppliers must notify customers and the existing provider within seven days of the requested change in service.
• Utilities cannot add charges to an electric bill for optional services without customer consent.
• Violators can be fined up to $30,000 for the first offense, up to $50,000 for the second offense, and up to $70,000 for repeated violations.

Telemarketing

• Customers can ask a retailer or marketer to place their name on the caller's Do Not Call list. The caller must keep a record of customer requests for 10 years and may not make further telephone solicitations.

Dispute resolution

• If a customer advises a utility, before the date of the proposed shut off of service, that all or part of a bill is in dispute, the utility is required to investigate the dispute promptly and completely; advise the customer of the results of the investigation; and give the customer an opportunity to settle the disputed claim or to satisfy any liability that is not in dispute.
• If the parties are unable to resolve the dispute, the utility must give the customer the opportunity for a hearing before a utility hearing officer. If the customer fails to request a hearing within 3 days after the opportunity for hearing is offered, or if the customer fails to pay the part of the bill that is not in dispute within 3 days after the date requested for the hearing, the utility may shut off service.

Discrimination/redlining

• Utilities cannot require a deposit or other guarantee as a condition of new or continued utility service based on income, home ownership, residential location, race, color, creed, sex, age, national origin, or commercial credit standards, if the applicant has prior utility service credit history with any electric or gas provider in Michigan or elsewhere during the previous 6 years.

Disclosure

• All Michigan electric suppliers must disclose information to customers, in a standardized format, about the environmental characteristics of the electricity products purchased by the customer, including the average fuel mix and average emissions.

Privacy

• Customer-specific consumption or billing data cannot be provided to any affiliate or other entity within the existing utility structure or alternative electric supplier without prior written approval of the customer. Customer-specific names and addresses cannot be provided to a utility's competitive affiliate or other entity within the existing corporate structure unless the same information is offered on the same terms and conditions, and contemporaneously, to all competitors.