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Electricity Plan Proposed by Consumers Energy Is Inadequate

Lansing, Mich. - A proposed Consumers Energy plan on how to acquire renewable energy could shortchange Michigan consumers, according to written testimony filed yesterday at the Michigan Public Service Commission by the Electric Power Supply Association (EPSA) on behalf of the Michigan Wholesale Power Association. In its testimony, EPSA pointed out shortcomings in how Consumers Energy proposes to procure the required 10 percent of electric capacity from renewable sources, expected to be primarily wind generation, under a new state law.

In EPSA's filed testimony, Daniel Dolan, vice president of policy, research and analysis, analyzed key components of Consumers' plan and listed several areas where it falls short of the best practices contained in a 2008 report done for the National Association of Regulatory Utility Commissioners and the Federal Energy Regulatory Commission.

"Michigan's legislature took the first step in growing a new renewable energy industry that can prosper in Michigan and in including competitive procurement in that process. Real opportunities for economic development exist. Reliance on competitive bidding to sort out the best opportunities for Michigan's ratepayers was the right move. But any competitive bidding process approved by the Commission must be fair and objective and viewed as credible by all potential suppliers of renewable energy. Consumers' renewable energy plan does not yet meet that standard," Dolan stated in the testimony.

Among other shortcomings, Dolan said that Consumers Energy failed to establish credibility in the fairness and objectivity of its procurement design when it failed to use a collaborative process to develop consensus on the design and when it failed to propose the use of an Independent Monitor, as is often part of a fair procurement process. Dolan's testimony includes examples where Consumers Energy put requirements on competitive suppliers not placed on its own bids even though competitive power suppliers are leading renewables providers nationwide. Examples include extensive details on project descriptions and financing not required of Consumers Energy's own plans.

In conclusion, Dolan said, "The competitive procurement mechanism is one that is used in every industry across our economy to protect consumers. Regulators can send the right message by making sure that competitive processes are carefully designed and managed. In this particular case, the Commission could take a constructive and critical look at the process that Consumers has proposed, and offer a meaningful assessment of that process in the context of the best practices detailed in the NARUC/FERC Study. It is especially important to protect Michiganders from unnecessary risk at a time when economic uncertainties are so high. We encourage regulators to promote a transparent, vibrant and fair competitive bidding process."

The testimony is available at www.epsa.org under "Recent Filings." The 2008 NARUC/FERC report is available at

http://www.naruc.org/Ferc/default.cfm?c=1

CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660

EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.