Navigating Michigan\'s 10% Electric Choice Cap: Strategic Options for C&I Buyers
Under Michigan law (PA 286), the state operates a "hybrid" deregulated electricity market where competitive retail supply (Retail Open Access or ROA) is strictly capped at 10% of the incumbent utility\'s total load. For the remaining 90%, commercial customers must pay standard DTE or Consumers Energy tariff rates. The 10% cap is currently fully subscribed, resulting in multi-year queues for businesses hoping to unlock competitive market savings.
Executive Impact (Michigan Market)
- →The Queue Strategy: Commercial facilities must proactively apply to enter the ROA queue. If you are not in the queue, you cannot capture savings when cap space occasionally opens.
- →MISO Capacity Pressures: Tariffs for DTE and Consumers Energy reflect MISO Zone 7 capacity obligations, meaning regulated businesses are fully exposed to wholesale grid volatility.
- →Legacy Protections: Properties passing through real estate transactions that already hold ROA status should carefully negotiate the transfer of that grandfathered status to the new owner to avoid falling back to the 90% regulated side.
The Mechanics of the 10% Cap
Unlike fully deregulated states like Pennsylvania or Ohio where any business can shop for competitive energy, Michigan restricts "shopping" (Retail Open Access or ROA) to a small fraction of the market. This policy was designed to protect the incumbent utility monopolies (DTE Energy in Metro Detroit, and Consumers Energy covering much of the lower peninsula) by guaranteeing they maintain 90% of the state\'s load.
Why Businesses Want In
The financial discrepancy between the competitive 10% and the regulated 90% is substantial. Businesses operating under AES (Alternative Electric Supplier) contracts generally bypass the heavy administrative tariff riders imposed by the utilities. Over multi-year terms, large industrial and commercial (C&I) facilities in the ROA pool can save millions on commodity supply compared to their regulated peers.
How to Play the Queue
Because the savings are so lucrative, the 10% cap is effectively always full. For a new business to get in, an existing business inside the 10% pool must either close down or voluntarily return to utility service.
When space opens up, the utility pulls from a waitlist—the queue. Positions in the queue are determined by the exact timestamp of application formatting compliance.
- Enroll Your Accounts: You must officially submit your load to DTE or Consumers to be placed in the queue. There is no cost to hold a spot.
- Maintain Status: Be prepared to wait 2 to 4 years. Queue status is tied to the physical meter and address.
- Be Ready to Strike: When your number is called, you have an extremely narrow window (often 28 days) to execute a contract with an AES. If you miss this window, your load hits the cap wall, and you are ejected to the back of the queue.
Real Estate Acquisitions and Grandfathering
If your company is acquiring a facility in Michigan that is currently participating in Retail Choice, it is critical that the ROA status is treated as an asset during due diligence. If the utility account transfer is mishandled during the real estate closing, the meter can automatically default back to regulated service, instantly surrendering its valuable 10% cap allocation and destroying the facility\'s energy OPEX model.
Source: Michigan Public Service Commission (MPSC).
Check Your Facility Status
Identify your current tariff position and prepare your Michigan facilities for the ROA queue.