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Michigan Competition Plan Meets Opposition

Fortnightly Magazine - August 1997

million of regulatory assets and $394 million of renewable energy contracts. Detroit Edison estimates a net annual rate reduction of $295 million, assuming 15-year bonds with a July 1, 1997 start date and a 7.5-percent interest rate.

Consumers Energy would propose to securitize $552.5 million of nuclear facilities, $311.6 million of generation-related regulatory assets, $24.2 million for Ludington pumped storage and hydroelectric plants, and $3.19 billion in contract capacity costs. Assuming 15-year bonds at an interest rate of 7.4 percent, Consumers estimates an immediate savings to customers greater than $200 million.

The PSC's order marks the first step in restructuring. The rest is up to the Michigan Legislature, which started hearings in April. Action is expected this fall.

By 2002, when full competition begins, only those states allowing Michigan utilities to compete will be allowed to provide power in Michigan.

Commissioner John Shea filed a dissenting opinion. "I have significant doubts whether the Commission has statutory authority to issue today's order, and would commend the matter to close legislative scrutiny."

Detroit Edison President and COO Anthony F. Earley Jr. noted that the PSC order carried good and bad news. Earley is disappointed that the PSC did not adopt its staff's restructuring proposal. "If it had, Detroit Edison would have begun immediately the transition to providing customers choice in their electricity supplier," Earley said. "Instead, we are left with several open-ended issues that first must be resolved before competition can proceed."

He said the order called for more hearings on delivery charges for customers choosing new power suppliers. Hearings also are required on issues of fuel and purchased power cost recovery. "These additional hearings will make it difficult to meet the goal of a final restructuring plan by the end of the year," Earley said. (em LB, PC

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