Michigan

Electric:

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.

Natural Gas:

The Michigan Public Service Commission has reformed the natural gas industry to give customers a chance to shop for lower natural gas rates. Starting at different points around 2001-2002, Michigan Consolidated Gas (MichCon), Consumers Energy, Michigan Gas Utilities and SEMCO Energy Gas Company opened their service areas to allow customers to choose a different company to supply them with their gas supply. Customers choosing an alternate gas supplier will still have their gas supply delivered by the local utility, but customers will be buying their gas supply from a new company.

A customer's natural gas bill has been separated into two parts:

• Regulated distribution of gas, which is still only provided by the utility, and
• Supply of the gas commodity, which is open to competition.

Customers can choose to receive their gas supply from their utility, or an alternate gas provider.

If customers do not shop for an alternate gas supplier, they receive default supply service from their utility. Under default supply service, customers pay a supply charge known as the Gas Cost Recovery (GCR) charge, which compensates the utility for arranging for the customer's supply. The Gas Cost Recovery can change monthly, meaning customers can be exposed to volatile swings in monthly prices. Customers can avoid wild swings in the gas supply charge by contracting with an alternative gas supplier.

No matter who you choose to buy energy from, your local utility will continue to deliver your gas and respond to service interruptions and outages. You will still pay your utility for these services. Depending on your area, you can choose to receive a single bill from your utility listing your utility delivery charges and supplier commodity charges, or separate bills from the utility and alternate energy provider.