Utility rates should be based upon a utility’s actual cost of providing service to each class - not projected cost. A cost of service allocation methodology should emphasize the cost of providing service at a utility’s time of peak demand and not overall energy consumption.

Utility customers should be given the proper price signals to allow them to understand that consumption will have a different cost during certain times in the day and season. Utilities should be given the opportunity to earn a fair rate of return. However the utility authorized rate of return must be in line with the industry average.

Additionally there needs to be corrective action if a utility has over-earned its authorized rate of return for two consecutive years.

Utilities should be required to compete against other non-utility suppliers to ensure that electricity rates are competitive. The utilities will continue to provide and profit from their transmission and distribution business (as well as all of the generation business that they win through competition).

Additionally, the current cap on electricity choice curtails economic development in Michigan so the elimination of the cap will help grow the economy. The 10% cap should be eliminated or at least raised to enable more customers to participate in electric choice.

Self-generation should be expanded to include efficient co-generation that is located off-site within close proximity to industrial customers. Many industrial customers have a need for both electricity and steam for the operation of their facilities. Electricity and steam generation from co-generation facilities is very efficient. Additionally, many times in order to satisfy the steam demand there is excess electricity generated.

Currently, industrial customers are limited to only being able to receive electricity supply from an efficient co-generation facility if that facility is located at their site. This means that even if there are several industrial companies within close proximity to each other, the current law prevents these companies from receiving electricity supply from an off-site centrally located efficient co-generation facility.