Small Businesses and Local Governments are being Subjected to a New Sales Pitch

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Homeowners, small businesses and local governments are being subjected to a new sales pitch — for cheaper natural gas — as the first wave of deregulation washes over Metro Detroit. "Our intention is to move toward a world where customers have greater choice ... to embrace a new, more competitive world, " said Fred Shell, spokesman for Michigan Consolidated Gas Co.

The rhetoric is lofty, but for residents the cost savings so far arc modest. Most home-owners who accept offers for cheaper natural gas can expect to save less than $ 60 a year. It's a different story for government and business. The Posen school district in Presque Isle County estimates savings of $ 1 000 a year from their choice of Cartier Replica Presque Isle Electric & Gas Co-op as a supplier. "That's a considerable amount for a small school system (of about 380 students) like ours, " Supt. Mike Munch said.

By 2001, more than half a million homeowners, small businesses, townships and schools across Michigan should be able to choose which utility supplies the natural gas that heats their shops, homes and buildings. Large corporations and factories have had their choice of suppliers since the mid-1980s, when the federal government expanded its deregulation of the interstate natural gas market. Vying for the choice dollars are numerous out-of-state utility companies. MichCon and Consumers Energy also will compete to provide gas to one another's customers.

As with the major electricity deregulation plans, the distribution of gas through interstate pipelines and local grids remains under the regulated control of MichCon, Consumers Energy and SEMCO. That's led to some of the .same criticism made of electricity deregulation proposals. Groups such as the Mackinac Center for Public Policy call most of the existing deregulation plans inadequate, saying they put competition on a tight leash, reducing potential benefits.

Lower savings mean less consumer interest, critics say. In one of the earliest pilot gas-choice programs in Grand Rapids, for instance, only 6 percent to 7 percent of the 50 000 eligible customers signed up. But supporters say much of the low participation was due to technical factors and the novelty of the program. As consumers have gotten more used to the idea of deregulation, they've shown more interest. Consumers Energy Replica Watches filled its quota of 100 000 customers choosing new gas suppliers in eight months — ahead of expectations. It opened some of the next 100 000 slots ahead of schedule last year.

Knuckle said the choice programs could lead to full-scale deregulation of the gas industry and lead the way for electricity deregulation, which still awaits federal regulatory approval and remains mired in litigation and the state Legislature. But Knuckle said it's too early to make any conclusions about the choice programs. The Public Service Commission advises customers to do some research before choosing a supplier.

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