While Michigan's average electricity rate increase of 29 percent since 2007 is not much different than the 28 percent average increase in Indiana and 22 percent average increase in Wisconsin, it is double the 14 percent average increase in Ohio and dramatically different than the 1 percent increase in Illinois.
If each of these states had similar declines in demand, why have price changes been so different?
The answer is Illinois and Ohio have competitive retail electric markets. Indiana and Wisconsin have clung to traditional monopoly regulation and Michigan, in 2008, abandoned its movement toward market-based pricing in favor of government price-setting.
.....Michigan's high rates are the result of the 2008 reversal of the customer choice and competition program begun in 2000.
Michigan's two largest utilities, DTE Energy and Consumers Energy, were keenly aware that during an economic slowdown they would have to charge lower prices to meet the competition.
Their solution was to outlaw customer choice except for a fortunate handful of customers accounting for just 10 percent of electricity usage, mainly larger businesses and government.
Monopoly regulation stands the world on its head — prices rise when demand drops.
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