Committee approves deregulation bill

Backers said the bills would increase competition and ultimately lower costs. But critics said the measures were a sellout for Michigan's big utilities and would increase rates instead.

"These bills go a long way toward making these companies (utilities) more successful," said Sen. Jim Berryman (D-Adrian).

Sen. Bill Schuette (R-Midland) said the legislation was not perfect, but he vote for it anyway.

But Sen. Mike Rogers (R-Howell) said the measures offered "at best status quo, and at worst will raise rates."

The main bill was approved by the Senate Technology and Energy Committee on a 3-2 vote. Joining Berryman and Schuete was panel chair Mat Dunaskiss (R-Lake Orion) while Rogers was joined in dissent by Sen. Dianne Byrum (D-Lansing).

A minor companion bill was approved unanimously. Both measures go to the Senate floor, and are expected to be debated next week in the Republican-run chamber.

But with the two-year session ending next month, and the House in Democratic hands, the future of the legislation is unclear.

Members of both parties are considering the legislative makeup next year - when both houses are controlled by Republicans - and the political implications of the legislation to themselves, especially if rates rise.

Committee approval saw Gov. John Engler and the Michigan Chamber of Commerce on different sides, a rare event. Engler, backed by big utilities, supported the Senate version; the chamber, supporting a range of big and small businesses, unsuccessfully supported amendments designed to limit costs more strictly.

"It think we have a way to go yet," Chamber President James Barrett said. Dunaskiss noted: "There is nothing to prevent the Legislature from going back and correcting an error we made."

John Clark, senior vice president of Consumers Energy, hailed approval of the bills.

"We need to get this job done," he said. "We need to add power plants in this state. We need to set the rules."

But the Customer Coalition, which represents businesses and residential users dependent upon the power companies, predicted a 10 percent rate increase because of cost increases approved above the rates frozen by the legislation.

Under the bills, 7.5 percent of each utility's annual peak load would be able to choose an alternative electric supplier within 60 days of the new deregulation laws taking effect. That percentage would rise in steps until all electric customer would have that choice by Jan. 1, 2002.

The legislation also would:

n Freeze rates at the 1998 level until 2003. The chamber wanted rates limited, not frozen, to permit them to drop if needed.

n Authorizes a code of conduct relative to utilities and their affiliates sharing resources and information. Some small business, such as construction firms, worried that utility subsidiaries could steal their business.

n Requires utilities to use part of their excess earnings to reduce "stranded costs," or the costs of moving from the current regulated scheme to deregulation.

Earlier, state Public Service Commission aide Gary Kitts said an average family would pay about $1.26 per month in transition fees if it switched to an alternative provider.

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