2000–2007 Restructuring in Michigan—Public Act 141 • In 2000, Michigan followed the trend of other states and adopted policies to allow retail customers to buy electricity from a supplier other than their incumbent utility, creating the retail open access (ROA) market. Michigan is one of 24 states to implement some form of electric deregulation and one of 18 states where deregulation is still active to some extent. • During the debate over Public Act (PA) 141—the burgeoning energy crisis in California caused the legislature to reexamine policy changes. Because of this, unlike other deregulated states, Michigan did not require utilities to sell off their power plants, creating the state’s unique hybrid market. • Despite being framed as creating a free market, the development of this new hybrid market brought about many new forms of regulation. • Mandated rate reduction and five-year freeze for residential customers • Securitization allowed utilities to refinance certain eligible costs, including capital assets that could not be recovered due to the advent of ROA, using low-cost securitized bonds. Securitization enabled utilities to reduce costs and offset the residential rate reduction requirement through a surcharge that was levied on all customers. • Despite market interventions, development of a truly robust ROA market was slow. Between 2001 and 2005, participation grew to nearly 19 percent of electric load being served by alternative suppliers, but participation receded quickly as natural gas prices and, in turn, wholesale power prices rose, declining to around 3 percent in 2008. Between 2004 and 2007, nearly 3,000 megawatts of load switched between utilities and alternative suppliers, raising concerns over who was responsible for long-term planning. • After the highly disruptive 2003 blackout, the state began to reexamine its electric energy supplies. The Michigan Public Service Commission predicted increased demand and tightening supply, noting that potential capacity shortfalls were due to problems with Michigan’s deregulated market which discouraged new investments to meet the state’s energy needs. Note: Eighteen deregulated states include­ —Connecticut, District of Columbia, Delaware, Illinois, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, Michigan*, California*, Oregon*, and Virginia*. *States with partial or limited deregulation policies