Ratepayers vs. Monopoly: How Will Next Utilities Commissioner Rule?

One man's resignation announcement from a relatively obscure public office puts back in the spotlight a debate over the role of markets versus regulation in the field of energy.

John Quackenbush, who has chaired the three-member Michigan Public Service Commission since he joined it in 2011, plans to leave the commission by March 31. Gov. Rick Snyder is expected to name a replacement before then.

The public service commission is the government agency that regulates public utilities in Michigan, including electric power, telecommunications, natural gas and transportation services.

Dave Murray, spokesman for Snyder, said he is unaware of any short list of possible replacements for Quackenbush. The governor has already chosen Sally Talberg, who has been on the commission since 2013, as its new leader.

Kevon Martis, director of the Interstate Informed Citizens Coalition (IICC), which opposes industrial scale wind power, said that the role of the commission is now particularly important considering what is — or is not — currently taking place in the Legislature.

“It doesn’t look like the Legislature will be taking action to deregulate Michigan’s electric utilities anytime soon,” Martis said. “That really leaves it up to the Public Service Commission to protect the interests of ratepayers.”

Laura Chappelle, who was appointed to the commission in 2001 and served until 2007, also stressed its significance.

“Certainly the issues of energy reliability and costs are of vital importance to the economy, businesses and residents,” Chappelle said. “It is of the utmost necessity that the MPSC remain an informed and impartial authority that will ensure that utilities recoup the cost of supplying service, while also making sure that the interests of both business and residential ratepayers are protected.”

“In a regulated environment — particularly one in which utilities have been allowed monopoly status — it’s the role of the MPSC to try as much as possible to achieve results that mimic a competitive market,” Chappelle added. “Although a chairman of the commission ultimately only has one of three votes, they do provide leadership that’s instrumental in helping to determine policy direction.”

Word of Quackenbush’s departure comes only a couple of months after the MPSC’s decision to allow Consumers Energy and Detroit Edison to increase rates. In early November, the commission granted Consumers Energy a $126 million rate hike and later that month it granted DTE a $238 million increase. Michigan currently has the highest electricity rates of any state in the region.

The commission does not determine the degree to which utilities are regulated or whether (or to what degree) they are given monopoly status. That decision is left up to the governor and the Legislature. In 2000, under Engler, Michigan’s electricity market was opened up to full competition and in the years that followed, Michigan’s rates were consistently either the lowest or among the lowest in the region.

But in 2008, the law was changed to limit the portion of the electricity market subject to this competition to just 10 percent. Rates — as compared to neighboring states — have been going up ever since. Currently, there is a measure (House Bill 4298) in the Legislature that its opponents claim would eliminate the final 10 market competition (so-called electric choice) that the utilities have to contend with and return them to full monopoly status.

In addition, the Legislature is also considering expanding the utility commission to five members. According to its official mission statement, the commission aims to “grow Michigan's economy and enhance the quality of life of its communities by assuring safe and reliable energy and telecommunications services at reasonable rates.”

The members of the Michigan Public Service Commission are appointed to staggered six-year terms by the governor, with the advice and consent of the Senate. The governor also determines who will chair the commission. No more than two commissioners may represent the same political party.