| Status: Almost all residential gas customers in the State have access to customer choice programs. |
Overview: As of December
2009, four natural gas utilities in the State (Consumers Energy Company,
DTE Energy (Michigan Consolidated Gas), Michigan Gas Utilities, and SEMCO Energy Gas
Company) offer customer choice programs to residential households. Participation reached an all-time high in December 2009 with 340,189 residential customers and 49,551 commercial and industrial customers enrolled. Earlier the Michigan Public Service Commission had announced that the number enrolled in October 2009 had surpassed the previous high reached in September 2002. Customer participation had increased sharply in 2002,
with more than 167,000 additional customers enrolled between October 2001
and October 2002. The PSC attributed the increased participation in part
to the larger number of marketers participating in Consumers Energy and
DTE Energy's programs in 2002 compared with 2001 (six vs. four). Several
marketers had exited the programs in 2000 and 2001, particularly since
they were unable to match the LDC commodity rates, which were frozen
during the winter of 2000-2001. Consumers Energy's rate expired at the end
of April 2001, while DTE Energy's rate freeze continued through December
2001 and SEMCO's through March 31, 2002.
In March 2003, the PSC
established licensing procedures for marketers participating in customer
choice programs, which require the companies to demonstrate they have
sufficient financial, technical, and managerial capabilities to provide
gas service in the State. Marketers also must comply with codes of conduct
in LDC tariffs. As of December 2009, 20 marketers are licensed as alternative gas suppliers in the State's choice program, 6 more than in December 2008. Ten of these marketers serve residential customers, two more than in 2008. Consumers Energy has 10 marketers serving residential customers in its service territory, DTE Energy has 9, SEMCO has 3, and Michigan Gas Utilities only 1.
The PSC in 2008 filed a formal complaint against the marketer Universal Gas and Electric Corporation (UGE) regarding its marketing practices. PSC reached an agreement with UGE in April 2009 that required UGE to offer to terminate contracts with certain customers without charge or give a $50 credit to customers who choose to remain with UGE. The company must limit its gas supply contracts to 1- and 2-year terms and limit its cancellation fees
to $50 for early cancellation of a 1-year contract and $100 for early cancellation of a 2-year
contract. UGE must submit its marketing materials to the PSC for approval and revise its contract terms to indicate that the terms and conditions of
the contract are specified in the user guide distributed with the contract.
The investigation into UGE's marketing practices also led to new consumer protection measures in October 2009. Choice customers now are able to cancel marketer service unconditionally up to 10 days beyond the due date of the first bill where the new marketer is listed. Previously customers had 30 days after enrollment to cancel. Also, marketers must execute cancellation requests without delay, even if an early termination fee or other penalty is owed. Only the customer account holder can sign a contract. Customers enrolling verbally or electronically will receive a written contract by mail, or by verifiable email, that is postmarked within 7 days of enrollment. These protections also apply to small commercial customers who use 500 thousand cubic feet (Mcf) or less per year; before they applied only to customers using 200 Mcf or less per year.
|
| EIA State Data: In 2008, Michigan had 3,172,623 residential customers, 252,382 commercial customers, and 10,562 industrial customers who consumed 342 billion cubic feet (Bcf), 172 Bcf, and 137 Bcf of natural gas, respectively. The average prices these customers paid for natural gas from local distribution companies were $11.93 per thousand cubic feet (Mcf), $10.66 per Mcf, and $10.26 per Mcf, respectively. Natural gas sales by marketers are included in the average price paid by commercial customers. |
| Eligibility and Participation in Retail Choice
Programs: |
| As of June 2005, all customers of Consumers Energy Company, DTE Energy
(Michigan Consolidated Gas), Michigan Gas Utilities (Aquila-MGU), and SEMCO
Energy Gas Company could participate in choice programs. Consumers Energy's and DTE Energy's 3-year pilot
choice programs have been approved as permanent choice programs. The cap on
Consumers Energy’s program increased to 600,000 in April 2001, to 900,000
in April 2002, and then to all of the company’s 1.5 million natural gas
customers in April 2003. DTE’s
program had an enrollment cap of 440,000 customers in 2002 that increased
to 660,000 in April 2003 and to all customers in April 2004. SEMCO’s choice program was expanded to 78,000 residential customers
and all nonresidential customers in October 2002. Another 39,000
residential customers could participate as of April 2003, and on April 1,
2004, all SEMCO customers became eligible. All customers of Michigan Gas Utilities also
became eligible for choice as of June 2005, although participation did not begin until April 2009. |
Eligibility and Participation by Customer Class, December 2009
|
Customer Type |
2008 Customer Total |
Eligible December 2009 |
Participating December
2009 |
|
Total |
Percent
of 2008 Customer Total |
Total |
Percent
of Eligible |
Percent
of 2008 Customer Total |
|
Residential |
3,172,623 |
3,136,895 |
98.9 |
340,189
|
10.8 |
10.7 |
|
Commercial* |
252,382 |
233,977 |
92.7 |
49,551 |
21.2 |
19.6 |
|
Total |
3,425,005 |
3,370,872 |
98.4 |
389,740 |
11.6 |
11.4 |
|
*Commercial eligibility and participation data include one company's industrial customers.
Sources: 2008 Customer Total: Energy Information Administration, Natural Gas Annual 2008 (March 2010). Total
Eligible: Based on company customer counts reported on Form
EIA-176, “Annual Report of Natural and Supplemental Gas Supply and
Disposition,” which is the primary data source for the Natural
Gas Annual. Total Participating: Michigan
Public Service Commission (February 2010). |
|
| Regulatory and Legislative Actions on
Retail Unbundling |
| Summary: Legislation was introduced in the
Michigan House of Representatives during the 1999-2000 legislative session
to allow all residential and commercial natural gas consumers in the State
(approximately 3 million) to choose their own gas supplier, but the bill
died in committee. In October 2000, the Michigan Public Service Commission
(PSC) approved uniform terms and conditions for statewide unbundling,
developed through a collaborative process. In November 2001,
the PSC approved uniform terms and conditions for customer choice programs
for mid-sized LDCs, which differ somewhat from choice programs being
operated by the larger LDCs. Consumer education programs were also
developed, and collaborative efforts are continuing to solicit public
input on the future direction of customer choice programs in the State. |
Regulatory and Legislative Actions
| Legislation |
09/08 |
House Bill 5524 and Senate Bill 213 passed. HB 5524 reforms the State’s utility framework, including a 10-percent cap (volumetrically) on the electric choice program. SB 213 establishes a standard and a funding mechanism for renewable portfolio/energy efficiency. This requires each utility to create electric and natural gas energy optimization plans per customer class. |
| |
12/02 |
Public Act 634
of 2002 (effective 12/23/02). The legislation requires that an alternative
natural gas supplier doing business in Michigan be licensed by the
Public Service Commission (PSC) and directs the PSC to establish
licensing procedures. It also directs the PSC to develop standards
governing slamming and cramming by alternative suppliers. |
| |
05/02 |
Consumer
protection legislation proposed, House Bill 6039. The proposed
legislation would establish new protections for natural gas
customers and set provisions covering customer switching, billing,
marketer licensing requirements, minimum disclosure standards, and
customer release of information rights. The bill was sent to the
House Committee on Energy and Technology. No further action was taken. |
| Regulatory Actions |
10/09 |
New consumer protection measures approved. Choice customers will be able to cancel marketer service unconditionally up to 10 days beyond the due date of the first bill where the new marketer is listed. Previously customers had 30 days after enrollment to cancel. Also, marketers must execute cancellation requests without delay, even if an early termination fee or other penalty is owed. Only the customer account holder can sign a contract. Customers enrolling verbally or electronically will receive a written contract by mail, or by verifiable email, that is postmarked within 7 days of enrollment. These protections also apply to small commercial customers who use 500 thousand cubic feet (Mcf) or less per year; before they applied only to customers using 200 Mcf or less per year. |
| |
04/09 |
Settlement with Universal Gas and Electric Corporation (UGE) approved. It requires UGE to:
• offer to terminate contracts with certain customers without charge or, alternatively, provide a
$50 credit if these customers choose to remain with UGE.
• reimburse certain customers for their time and costs associated with litigating this case.
• reimburse the State $300,000 to cover some investigative costs
• submit its marketing materials to PSC staff for review and to change certain products and
marketing practices. The company must limit its gas supply contracts to 1- and 2-year terms and limit its cancellation fees
to $50 for 1-year contracts and $100 for 2-year
contracts. Terms and conditions of
the contract will be specified in a user guide distributed with the contract. Customer receipt of these materials must be verified by recorded telephone calls. The agreement also specifies that customers may cancel their contracts over the phone without the need for making the
request in a separate written document. |
| |
05/08 |
Formal complaint initiated against marketer UGE. Based on the investigation that started in February 2008, the PSC filed a formal, contested complaint against UGE regarding its marketing practices (Case U-15577). |
| |
02/08 |
UGE's marketing practices investigated. The PSC began an investigation into UGE because of a disproportional number of complaints in 2007 regarding the company's marketing practices. According to the PSC, many of the complaints centered on alleged misleading depictions of potential savings and overreaching sales tactics. |
| |
10/07 |
Consumer standards and billing practices revised. The PSC revised its rules governing consumer standards and billing practices for residential natural gas and electric service to reflect industry and technological changes. According to the PSC, the rules provide customers with more service shut-off protections by clarifying responsibility for bills, prohibiting estimated meter reading, lowering deposit requirements during the winter, and giving customers more time to pay their bills. |
| |
05/07 |
Companies ordered to provide 30-day cancellation notice to small commercial customers (Case U-15215). The PSC adopted the consensus position reached during a collaborative meeting of utilities and other parties that there should be a 30-day cancellation notice to all customers that have 200 Mcf or less annual aggregated usage. |
| |
02/07 |
Docket opened to investigate customer choice tariffs (Case U-15215). The PSC opened a docket in response to
a request by Universal Gas and Electric Corp. for a
declaratory ruling regarding the need to provide a 30-day unconditional contract cancellation period to customers who purchase more than 2,000 Mcf of natural gas annually. The docket consolidated UGE's request with an investigation of customer choice tariffs. |
| |
10/05 |
PSC issues
emergency billing rules (Case U-14668). The PSC set new rules
for utility billing during the 2005-2006 heating season (Nov-March).
It extended bill due-dates by 5 days, prohibits shutoffs for failure
to pay estimated bill by due date, and prohibits shutoffs for
customers 65 years old or older, or whose household income is no
more than 200 percent of the poverty level, provided the customer
pays monthly amount totaling 6 percent of estimated annual bill. |
| |
06/05 |
Licenses granted
to WPS Energy Services (Case U-14554) and Direct Energy Services (Case U-14537). The PSC approved WPS
Energy Services’ and Direct Energy Services' applications to be licensed as alternative gas
suppliers. |
| |
03/05 |
License granted
to Presque Isle Co-Op (Case U-14434). The PSC approved Presque
Isle Co-op’s application to be licensed as an alternative gas
supplier. |
|