Report Says Expanding Electric Choice In Choice-Limited State Could Reduce Utility Spending By $8 Billion

The Mackinac Center for Public Policy issued a new report which estimates that raising Michigan's electric choice participation cap from 10% to 30% could reduce utility spending by as much as $8 billion.

"That could save customers millions of dollars by reducing the need to fund unnecessary utility projects through higher electricity rates," the Mackinac Center said

More than 5,100 customers are waiting to participate in Michigan's electric choice program due to the current 10% cap

Expansion of the choice cap to 20% would lower utilities' infrastructure investment needs by $3.5–$4 billion, the report says

The new report, "Competitive Power, Affordable Rates", says that DTE Energy and Consumers Energy plan to build nearly 30 gigawatts of new generation, storage, and other energy resources over the next two decades, at an estimated cost of $39 billion.

The report says that under the 10% choice cap, utility investments will be required to serve 7,878 MW of new load. With a 30% cap, the required load for which the utility must invest in generation would be only 3,550 MW, with the report estimating the avoided utility generation investment under expanded choice as $7.1 billion

The report says, "The states that maintained a full, competitive market on the generation and sale of electricity have fared better on price performance than the states that legalized monopolies. When Michigan created a 90% monopoly for investor-owned utilities, the average electricity price rose above those in nearby states and nationally. It has stayed in that position ever since."

The report lists the Average Total Electricity Price Change, 2008-2024, as follows:

State   Price Change
IN          60%
MN          59%
MI          59%
WI          41%
OH          36%
PA          34%
IL          34%
NY          19%

Source: Energy Information 
Administration Form 861. 
Annual average price per Kwh 
percentage increase 
2008-2024

The report recommends that Michigan lawmakers:

• Raise the electric choice participation cap to 30%.

• Account for alternative suppliers when utilities forecast future generation needs.

• Allow new and expanding electric load to use choice without increasing utility procurement obligations.

• Count qualifying alternative supplier resources, including nuclear power, toward Michigan’s net-zero requirements.

• Act before utilities lock in a new generation investment cycle that will shape customer rates for years.

The Retail Energy Advancement League (REAL) said that report shows the savings available to customers in all monopoly states from a Buy Your Own Power (BYOP) policy

"The U.S. is projected to need 270 GW of new power generation by 2030 -- a financial risk that will be placed on ratepayers in states with utility monopolies," REAL noted

REAL said that Mackinac’s analysis also shows that the amount of power consumed by electric choice customers in Michigan is the equivalent of $3-$4 billion in avoided utility-owned generation costs.

REAL said that Michigan choice program participants saved $185 million on electricity prices in 2024 alone

“Even if every new data center pays the full cost of the power needed to serve it, ratepayers are still facing the cost of replacing power plants that currently serve their homes because they are retiring,” said Abby Foster, Senior Vice President of Policy & Advocacy for the Retail Energy Advancement League (REAL). “Buying your own power isn't just about who pays for the new load. It's about who pays for the next generation of power that must be built regardless of data center load growth.”

“Mackinac's analysis demonstrates the magnitude of the opportunity for others,” Foster said. “Michigan capped participation at 10 percent nearly two decades ago, limiting the potential benefits. States now have an opportunity to build on and improve the concept, allowing more customers to finance their own power and reducing how much of the next generation of power has to be paid for by everyone else.”

“Michigan isn't a model states should copy word-for-word, but it demonstrates an important concept,” Foster said. “If a customer is willing to buy and finance its own power, let them. Every megawatt that customers voluntarily take responsibility for themselves will reduce the amount of new generation utilities need to build or procure, protecting ratepayers from increased electric bills.”

BYOP legislation has been introduced in half a dozen states