Corporate cronyism is a term that describes a system where success in business depends on rigging the relationships between a company and government. Corporate welfare, special treatment, and onerous regulation of a businesses’ competition produce an unfair and unjust playing field where the well-connected succeed and the rest aren’t even given a chance.
One needn’t look far in Michigan to find examples of this kind of perverse and destructive relationship between government officials and big business — just take a gander at DTE and Consumers Energy.
Last Christmas, DTE and Consumers Energy left a giant lump of coal in families’ stockings, when state regulators agreed to their demands to raise rates by $258 million a year.
Now, just over a month later, they’re back. This month DTE Energy filed a new request with the Michigan Public Service Commission to raise rates an additional $344 million a year.
But the $602 million in new rate hikes Michigan electric customers can see represent only the tip of the crony corporate iceberg hiding beneath the surface — with lawmakers and regulators racing toward it at top speed.
The real disaster for ratepayers comes in the form of Senate Bill 437 — the so-called “Nofs-Nesbitt” plan — legislation that would kill electric choice in Michigan and force every electric customer in the state to purchase their juice from a monopoly utility.
DTE and Consumers are pulling out every trick in corporate cronyism’s playbook to get their bill passed. According to media reports, the big monopoly utilities have an astounding 69 different lobbyists on the payroll working over lawmakers and regulators.
They spent more than $4 million in 2015 alone, including more than $2.5 million of rate-payers’ money, on slick television and radio advertisements promoting their legislation. And they’ve forced themselves into every conceivable work group and backroom meeting at the state Capitol to write and promote bills that essentially outlaw the existence of their competition.
The utilities’ energy plan failed spectacularly to gain traction in the House last year, where everyone from public school administrators to neighborhood small business owners lined up to speak out against it.
Now DTE and Consumers are back, hoping they’ll have a better fate in the state Senate.
Let’s not mince words. These actions illustrate the behavior of a pair of Michigan companies that are attempting to rig the system — with elected lawmakers’ and appointed Lansing officials’ help — to disadvantage average working families in Michigan.
They struck their first major blow in 2008, when they pushed through a new law that capped their competition at 10 percent of the market. According to economists, working families, struggling small businesses and neighborhood schools have been paying increasing electric rates ever since that have ballooned to 1,100 percent above those paid by our Midwest neighbors.
In hard dollars and cents, that translates to $10.5 billion in protected profits for Michigan’s incumbent energy cartel. Or, more personally, roughly $1,000 in extra Big Utility profit for every man, woman and child in Michigan.
Unfortunately for ratepayers, 90 percent of the market isn’t enough for DTE and Consumers.
Their plan would raise prices on thousands of customers who currently get a better price on their electricity from alternative providers and permanently close the door on an additional 11,000 customers with signed contracts waiting for the chance to shop competitively, protecting an estimated $235 million a year in additional overcharges.
Their crony plan would also eliminate nearly $24 million in annual savings from Michigan’s public schools. SB 437 — essentially a budget cut for schools — would force more than 200 local school districts that currently shop competitively for electricity to make staff and spending cuts the equivalent of laying off 380 teachers.
What ails Michigan is not that it suffers too much competition and choice in energy but that we have too little — and too much corporate cronyism.
by Greg McNeilly, chairman of the Michigan Freedom Fund