Michigan, which for years allowed all customers to shop for an alternative electricity supplier, made several changes in 2008 to limit the amount of customers who can buy their electricity supply from a company other than the utilities.
Under Michigan's new law, only 10% of the electric sales in a utility's service area can be sold by an alternative electric supplier. This means if you're interested in saving money on your electric bill by buying from a competitor, the opportunity may not be available if too many other people have shopped for electricity from an alternative provider. If you're interested in shopping for a cheaper electric rate, or to get a customized product such as green energy, now is the time to do so, before the 10% cap is reached. Utilities will soon be building new, expensive power plants that their customers will have to pay for, and greater interest in buying supply from a competitor is expected as prices increase.
When you buy electricity from an alternative provider, you are buying the supply, or commodity, portion of your bill. Your local utility will still handle delivery of this supply to your home or business, and you will still pay them for these delivery services.
Customers who either choose to remain with the utility, or who are denied the opportunity to leave, are served on default supply service. While the cost of default service typically changes only once a year, it is subject to various "true-ups," or adjustments for previous years. For example, utilities often defer many supply expenses, then collect them in later years, hitting customers with higher costs than they expected when they initially consumed their power.
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