Proof the Consumers Has Been Subsidizing Its ASP

For 20 years heating contractors have been saying utility appliance repair prices are subsidized by utility customers. 

Finally – because of the Code of Conduct – Consumers has to compete fairly and it has admitted the revenue won’t cover all the costs! 

This proves Consumers has been cross-subsidizing!

This proves that the Code of Conduct is needed!

If changing rules to prevent cross-subsidizing (SB612) makes up the shortfall between revenue and cost where will the additional amount come from if not from subsidies? 

            As an equation:   ASP Revenue +     ?      > ASP Costs 

From Consumers Energy perspective:

Before Code of Conduct:  ASP Revenue > ASP Costs

After Code of Conduct:  ASP Revenue < ASP Costs?

(What has changed other than cross-subsidies are eliminated?)

With SB612 relief:  ASP Revenue + (SB612 relief) > ASP Costs

- From Code of Conduct perspective:

Before Code of Conduct:  ASP Revenue + Cross-Subsidy > ASP Costs

After Code of Conduct:  If ASP Revenue Cross-Subsidy  < ASP Costs

                                     ...then ... Solution:  Cut costs or raise price!

vs. SB612 solution – turn back the clock and let utilities subsidize at the expense of utility customers and competition by propping up the inefficiencies of Consumers.

Part of the ‘promoting competition’ of PA141 is if utilities are allowed to enter a competitive market, then it must not also face competitive realities such as cutting costs or raising prices.  To allow subsidies promotes unfair competition.

For 20 years subsidies let utilities compete at below market prices and obtain a large market share.  Now Consumers essentially admits it needs an unfair competitive edge to compete.  The Code of Conduct is accomplishing its stated purpose – why change it?