Michigan Developments
Eric Rule,
Director of Governmental Affairs

Bill package threatens electric choice

A long-anticipated package of bills introduced in early July would eliminate electric choice for virtually all retailers in Michigan and mean higher electricity bills for most businesses in the state.

According to estimates, Senate Bills 1331-1336 would make 95 percent of DTE and Consumers Energy customers pay more than they would if the bills were not passed. The bills also threaten to kill opportunity for competition and increase profits for the two major utility companies.

DTE rates are already 40 percent higher than the average rates in Indiana, 24 percent higher than those in Ohio and 21 percent higher than those in Illinois. The cost of electricity is a critical component of manufacturing, and because electricity in Michigan is the most expensive in the Midwest, increasing costs will only further hurt business and slow job expansion in Michigan.

“This package admits Michigan’s electric rates are too high by providing a mandatory 10-percent rate cut for K-12 schools,” said Eric Rule, director of government affairs for Michigan Retailers Association.

“However, the rest of Michigan’s consumers are left to cover the bill by paying higher rates. Small businesses and manufacturers deserve the same cuts offered to schools.”
Businesses across the state, both large and small, have been saving 10 to 20 percent on electric bills, thanks to electric choice legislation passed in 2000. Collectively, MRA’s electric choice program saves retailers $1 million a year in electric costs. This translates into an average savings of $4,000 per year for each retailer.

The legislation would eliminate electric choice for retailers that generate under 1 megawatt of electricity per meter per month. Since even stores the size of Wal-Mart do not use this amount of electricity, it is clear that almost every retailer in the state would be excluded from taking advantage of electric choice.

Michigan Retailers Association has been actively following the legislation and is strongly opposed to the proposed changes. Retailers are encouraged to get involved in the legislative process through MRA’s Voter Voice network. Retailers can access Voter Voice through MRA’s website at www.retailers.com. By clicking on the government affairs tab and selecting the “Get Involved” tab, retailers can contact their own legislators with prepared letters of opposition.

Improved community health budget clears House

The House approved a Department of Community Health Budget—which contains the Medicaid budget—that is significantly different from the Senate-passed version. The House corrected flaws in the original bill that would have caused serious damage to retail pharmacies in Michigan.

The House essentially returned the budget boilerplate back to the language in the current statute regarding the pharmacy-dispensing fee and Average Wholesale Price (AWP). It also removed references to a pharmacy quality assurance and assessment program (QAAP), otherwise known as a pharmacy tax.

The remaining challenges are still great. The bill is headed for a conference committee to hammer out differences between the two chambers’ recommendations.

Retail pharmacy must continue to lobby aggressively to make sure the House changes are not stripped from the bill.

Update from Washington
James Goldberg,
MRA Washington Counsel

FTC rejects 'do not spam' list

The Federal Trade Commission has advised Congress that it does not believe creation of a national “do not e-mail” registry is feasible, not-withstanding the highly popular “do not call” list it created last year to block unwanted telemarketing calls.

Congress directed the FTC to look into creation of a national “anti-spam” registry as part of last year’s legislation aimed at cutting down on unwanted electronic messages. That bill, known as the CAN-SPAM Act, requires senders of commercial e-mail messages to put accurate return addresses on their messages, identify them as advertising messages (where appropriate) and provide customers with the ability to notify the sender that future e-mails are not wanted.

However, the FTC concluded after its three-month study that current technology doesn’t track specific identities of spammers, making policing a national registry difficult if not impossible.

The agency did indicate that it would convene an “authentication summit” this fall involving major Internet service providers and software companies. The FTC will urge them to adopt a broad national standard for new technology that would make it more difficult to disguise the origin of unwanted e-mails.

'Do not fax' exemption may return

Rep. Fred Upton (R-MI) and 24 other members of Congress recently introduced the Junk Fax Prevention Act of 2004 (H.R. 4600), which, despite its name, actually restores an exception to the decade-old prohibition against the sending of unsolicited commercial fax transmissions.

Upton’s bill would permit retailers and others to send unsolicited faxes to those with whom they have had an “established business relationship,” that is, customers, so that these individuals can receive notice of upcoming sales and new products.

The exception had been recognized for many years in regulations issued by the Federal Communications Commission, but last year the FCC did an “about-face” and declared that the exception was not authorized by law and would therefore be revoked. The agency stayed the effective date of the revocation to see if Congress would act to restore it.

Now, it appears that Congress may be poised to do just that. Although very few legislative days are left in the current Congress, MRA’s Washington Office is working closely with other business organizations to garner additional support for the Upton bill.

House bill reduces depreciation period

By a surprisingly large margin of 251-178, the House has passed a corporate tax bill that includes a provision pushed by MRA’s Washington Office to reduce the depreciation period for retail store leasehold improvements from 39 years to 15 years.

The bill would be a major boost for retailers who install new furniture and fixtures in their stores. Under current law, unless the expenses qualify for the small business exemption, they must be written off over 39 years, a period that far exceeds their useful life.

The House bill would also extend the increased small-business expensing rule by two years. That rule, passed in 2002, allows eligible small businesses to write off up to $100,000 of what would otherwise be depreciable expenses, but only for the 2003-2005 period. MRA also supported the extension.

The Senate approved its version of the bill in May, but Congress is on an abbreviated schedule this summer, so a House-Senate conference committee probably will not even convene until after Labor Day.

New tariffs on Chinese bedroom furniture

Acting in response to a complaint filed by U.S. furniture manufacturers, the federal government has slapped new tariffs on a broad range of wood bedroom furniture made in China, because the products have been “dumped” in this country, or sold at less than fair market value in order to gain a market foothold.

The tariffs range from 4.9 to 198 percent, depending on the factory where the products are made. The highest tariffs were imposed on small Chinese companies that account for about 20 percent of the market and effectively price their products out of the U.S. market.

The tariffs will be reviewed at the end of the year to determine their impact. However, some published reports have indicated that some Chinese manufacturers have established factories in other Asian countries to avoid the tariff’s impact altogether.

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