The Commission has observed an increase in marketing to residential and small commercial customers. It also reports concerns have arisen in this regard with respect to presentation of misleading information, autmoatic renewals at different terms, customer account transfers among suppliers, and supplier and customer obligations in the fixed term contracts. As a result it has determined to review existing consumer protection regulations to consider the following proposed changes:

"*A requirement that any comparison with standard offer include the term length for both standard offer and the CEP offer;
*A prohibition in promotional or marketing activities on any suggestion that the CEP is associated with the utility, as well as a requirement for clear identification of an entity as a competitive provider of electricity not associated with the utility;
*A prohibition on automatic renewals without affirmative customer consent if the price or other significant terms (e.g., length of contract term) are changed;
*A prohibition of the transfer of customer accounts to another CEP unless the previous terms are honored, and customers are given the option to change suppliers; and
*A requirement that any contract that binds customers for a particular term also bind the supplier for a same term (e.g., contract cannot obligate customers for a 12 month term, while simultaneously allowing the supplier to terminate at any time)."

The full text of the Order is available on the NEM Website.

Following on Governor Snyder's Special Message on Energy and the Environment that was issued last year which charged the Commission and Michigan Energy Office with undertaking an information gathering process to formulate state energy policy, a final report on electric choice has been submitted to the Governor. Since the draft version of the report was posted, additional information has been included in the report pertaining to choice participation, customer savings and the impact of the choice cap change on the financial stability of utilities; rate levels in deregulated versus regulated states; and rate volatility and pricing stability.

The Report discusses issues associated with three different electric choice policy outcomes, namely adjusting the current 10% shopping cap; moving to full regulation; or moving to full customer choice or full deregulation.

Policy considerations attendant with adjusting the shopping cap were described in the report as, "Should a modification to the cap be implemented, policymakers may consider the level of the adjustment to the cap as well as the possible implications of such an adjustment. In consideration of the adjusted cap, there could also be the potential of setting separate caps for different classes of customers. Policymakers could also consider granting the MPSC the authority to adjust the cap, which may provide for increased flexibility and responsiveness in the long run administration of the program. Although not required, policymakers could consider and address the additional loss of full-service load that a regulated utility may expect to experience and how the loss of such load should be handled for ratemaking purposes. Examples of these considerations may relate to the possible provision for immediate rate relief for large volume losses to customer choice or alternatively the requirement that a utility not be able to project customer choice load loss as part of a rate case before the loss has materialized. This option assumes that the generation assets of any affected utility operating under an adjusted cap would remain regulated by the MPSC, although that may be a policy consideration depending on the cap amount and other factors. Policymakers may also be confronted with issues related to allocation of certain types of costs to full-service customers versus all customers, including those on choice."

Regarding a move to full regulation, the report identifies these policy considerations: "A decision to move to full regulation would require policy considerations regarding the implementation process. Specifically, it would be necessary to determine what would be done with customers currently taking service from an AES. There are many paths that could be taken during the transition to full regulation. Customers being served by an AES could be allowed to continue the service through the end of their contract or could be asked to go back to full service by a certain date. Policymakers could also consider allowing current choice customers to remain on choice until a time when they choose to take full service from the utility, simply closing the door to new entrants. This provision could also be extended to customers currently waiting to move to customer choice. Although not presented in the public comments, policymakers should be aware of and consider the potential impact and ramifications of interference with contracts within a move to full regulation (or decrease of the 10% cap). The provisions outlined above may or may not impact current choice contracts in such a transition. These are just a few of the many possible paths policymakers could take to transition to full regulation."

Finally, with respect to a move to full customer choice or full deregulation (no regulated rate option), the policy considerations identified in the report include: "A move to full deregulation (no regulated rate offering) is an option that requires considerable policy consideration. The main points of consideration would be whether or not to require the divestiture of generation assets and the treatment of stranded costs, if applicable. Policymakers could consider requiring the divestiture of generation assets, whether such divestiture is to an unregulated affiliate of the utility, spun off to create a new public entity or a sale to an independent party. In lieu of this, divestiture may not be required but could be incentivized by other policy considerations. Should divestiture be required, policymakers may need to consider the treatment of stranded costs and whether these costs would be allowed to be collected from customers. In addressing stranded costs, policymakers may consider the option of allowing for securitization of the assets. Given the potential impact of the collection of the stranded costs, policymakers may also give consideration to temporary rate freezes or other rate structures for the default provider during this transition period."

The full text of the Energy Choice Report is available on the NEM Website.