Potential for Economic Regulation of Michigan’s Water Sector

Abstract

This policy brief considers the potential role for economic regulation of water utilities in Michigan, particularly given considerable pressure on infrastructure costs and prices and subsequent concerns about efficiency and equity. Economic regulation by state public utility or public service commissions (PSCs) is widely accepted for privately (investor) owned utilities in the United States. Michigan is one of only six jurisdictions that do not regulate water utilities (along with the District of Columbia, Georgia, Minnesota, North Dakota, and South Dakota). Today, while all of Michigan’s 1,385 water systems are subject to environmental regulation, none are subject to economic regulation, including rate review.