Good afternoon Chairman Patterson and members of the committee. My name is Steven VanSlooten, and I come before you today on behalf of the approximately 4,000 members of the Michigan State Utility Workers Council. We represent employees at Consumers Energy, Midland Cogeneration Venture, and Marysville Gas Liquids. We very much appreciate the opportunity to address this committee regarding the issue of appliance service programs, and to ask for your support for Senate Bill 612.

Utility employees have been performing repair work on home appliances for many years. The appliance service program began as a way of creating efficiencies in the natural gas portion of Consumers Energy operations. Employees who installed and maintained gas mains in the summer months were idled by inclement weather in the winter. However, the appliance service program provided these employees winter work, and at the same time provided a valuable service to the customers. The program also has the added benefit of reducing gas prices for Consumers Energy customers, since any profits gleaned from the repair service are factored in when the Public Service Commission sets gas rates.

Consumers Energy's appliance service program allows customers, for a monthly fee, to receive repair services on natural gas appliances, 24 hours per day, 7 days per week, 365 days per year. This repair service is performed by highly trained utility personnel or authorized contractors. Approximately 175,000 customers in Michigan currently use this service.

Earlier this year, the Michigan Public Service Commission issued an order for Consumers Energy to functionally separate the appliance service program from its regulated services. This was purportedly done in order to prevent cross-subsidization between regulated and non-regulated utility services, despite the fact that there has never been any evidence that Consumers Energy was subsidizing the appliance service program with ratepayer dollars. To the contrary, Consumers Energy has demonstrated on more than one occasion that the accounting from regulated services and the non-regulated appliance service program have been kept strictly separate.

Nonetheless, the Public Service Commission saw fit to establish a code of conduct that would effectively force Consumers Energy to create a brand new company in order to continue providing the appliance service program. The program was started to create efficiencies and a steadier workload for employees. Forcing Consumers Energy to create a new and separate subsidiary removes these incentives, and is effectively no different from banning the program altogether. To our knowledge, Consumers Energy has neither the financial ability nor the will to create such a company, and, unless the current Public Service Commission order is changed, Consumers Energy plans to discontinue the appliance service program altogether at the end of this year.

The loss of the appliance service program would have an adverse effect to its approximately 175,000 customers who enjoy and rely upon its service. It would also be devastating to the approximately 100 Consumers Energy employees who would lose their jobs should the program be discontinued. The loss of those personnel would have the added impact of reducing the available workforce to respond to emergencies and perform routine maintenance on the gas infrastructure.

The statutory authority granted to the Public Service Commission in PA 141 of 2000 for the creation of a code of conduct was not specific in regard to the appliance service program. In fact, the argument could be made that the language was only intended to apply to electric utilities, and therefore should not affect the gas appliance service program at all. Senate Bill 612 would clarify these questions and specifically address the issue of appliance service programs, setting out clear boundaries and limits.

Senate Bill 612 would place a statutory ban on cross-subsidization, but would allow Consumers Energy to continue to use its own employees and authorized contractors to perform home appliance repairs. It would also ban the use of advertising for the program in regulated gas billings. The legislation even creates a market share test to ensure that fair competition continues. The bill would address the main concerns of the program's opponents, while allowing customers to continue to utilize this successful, effective program, and also allow approximately 100 employees to keep their jobs and provide for their families.

For all of the above stated reasons, we urge your support of this important legislation.

Thank you again for the opportunity to speak today. I would be happy to answer any questions you may have.