News Story

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

State agency that regulates public utilities undergoing transition

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.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Union Activists Protest Opposition to Coerced Union Dues

U.S. Supreme Court to consider case next week

About 10 union activists protested Thursday outside the Midland headquarters of the Mackinac Center for Public Policy. The issue was the free-market think tank's involvement in a case before the U.S. Supreme Court that could make it illegal to force government employees to pay union dues or fees as a condition of employment.

The protesters were holding signs from the Service Employees International Union (SEIU). From 2005 to 2013, the SEIU had a dues skimming scheme by which the union collected more than $34 million from home-based caregivers, many who were were caring for family members or friends.

Progress Michigan, a progressive organization that has received contributions from teachers unions, including the Michigan Education Association and the National Education Association, sent out an email announcing the protest.

“Just as people are free to protest under the First Amendment, we believe public employees should be free to choose what organizations they financially support,” said Michael Reitz, the executive vice president of the Mackinac Center.

The U.S. Supreme Court has scheduled oral arguments next week in Friedrichs v. California Teachers Association, which pits California public schoolteacher Rebecca Friedrichs and several others against that state’s largest teachers union. The plaintiffs argue that collective bargaining for government employees is inherently political, which makes the union dues teachers are required to pay the equivalent of coerced contributions paying for political activity. Friedrichs asserts that because she and her co-workers have no choice about whether to pay union dues, they are therefore forced to support political activity they may oppose.

The unions and its allies say that union fees ensure that unions aren't forced to provide services to people without being compensated for it. Unions typically advocate to represent all workers in a workplace, regardless of whether they are members of the union, in order to enhance their negotiating power.

Progress Michigan responded to an email seeking comment by sending its press release on behalf of SEIU Michigan.

“We’re protesting the Mackinac Center because they are nothing more than a mouthpiece for the wealthy and well-connected who have waged a war on workers for over 30 years in Michigan,” said Thalia Cooper, a truancy abatement clerk for the Saginaw City School District, in the press release. “Billionaires are spending unlimited money on campaigns and shadowy groups like the Mackinac Center to take away our rights, our voice and ability to join together to improve the workplace and the services we provide. People need to know the real intentions of groups like the Mackinac Center.”

When the state stopped skimming money from home-based caregivers on behalf of an SEIU affiliate in 2013, its membership dropped 80 percent as few people decided to voluntarily pay dues to the union.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.