The Michigan Public Service Commission approved a 0.78% rate increase, directed new action on community solar, solar tariffs, and low-income assistance enrollment
State regulators approved a $30.5 million rate increase for DTE Energy’s electric customers on Friday, rejecting 90% of what DTE had asked for originally. The new rates, which take effect Friday, will mean a monthly bill increase of 71 cents, or 0.78%, for a typical electric customer consuming 500 kilowatt-hours of electricity per month.
The decision closed out a 10-month contested case where environmental groups, Kroger, Attorney General Dana Nessel, and other interests intervened to ask the Michigan Public Service Commission to reject the 8.8% rate increase DTE originally requested. That rate increase would have meant $388 million in additional annual revenue for the company.
In the 606-page order, the MPSC laid out many reasons for only approving a fraction of DTE’s requests. Chief among them, according to its press release, was that residential customer bills provide the company with sufficient money to run its business, invest in clean energy, and upgrade the electric grid. The Commission noted that residential electric sales surged in 2020 and 2021.
DTE responded to a request for comment with the following statement: “DTE’s efforts remain focused on improving reliability and maintaining affordability for our customers. We are reviewing the order and its implications on our future investments in Michigan and look forward to continuing our work with the MPSC.”
The decision came after a season of widespread outages during August thunderstorms where more than 900,000 customers lost power, some for up to a week.
“DTE has been asking its customers to pay more and more for deteriorating and outage-prone electric service,” Amy Bandyk, executive director of the Citizens Utility Board of Michigan, said in a statement. “The MPSC agreed with CUB, the attorney general, and others that, in many instances, DTE failed to do its homework and prove that its spending requests were in the best interests of ratepayers.”
The case saw an unprecedented amount of public engagement. For the first time in recent memory, the MPSC held a public hearing in the case in response to public outcry. More than 200 people attended the August hearing, the vast majority calling on the MPSC to reject the increase.
“As far as anyone at the MPSC remembers, the Commission hasn’t held public hearings on rate cases in the past,” MPSC Spokesperson Matt Helms told Planet Detroit.
Independent consultant and activist Jackson Koeppel credited that engagement with producing the case’s outcome.
“This is a good indication that the Commissioners are stepping up to be consistent and holding utilities accountable,” Koeppel, who said even the 0.78% increase is too much, told Planet Detroit. “The number should have been zero,” he said.
The case marks the lowest amount approved in a DTE Energy electric rate case in at least the past decade. The Commission typically approves a portion of proposed rate increases and has demonstrated a willingness to reduce them substantially in recent years.
“In the last 10 years or so, the Commission approved a settlement agreement that resulted in a $24 million rate reduction for electric customers of Consumers Energy in January 2019, representing a 41% cut of the $58 million the company had sought. And in 2018, the Commission approved only 5.95%, or $10.6 million, of the $178.2 million Consumers Energy sought from its natural gas customers,” Helms wrote in an email.
The commission also used the rate case to set some standards for DTE’s future actions. Here’s an explanation of some of the order’s key provisions:
Solar fees and caps
The Commission rejected DTE’s proposal to reduce the return it pays to distributed generation providers (such as rooftop solar owners) and its proposal to place a demand charge on those customers.
Under a law passed by the Michigan Legislature in 2008, investor-owned utilities must connect distributed generation resources such as solar panels to the grid up to 1% percent of the utility’s average in-state peak load – the maximum electric load carried by the system during times of high demand – for the past five years.
In its order, the Commission adopted MPSC Staff’s proposal, which increases the payment to solar owners by about 0.2 cents per kilowatt hour, according to John Richter, a senior policy analyst with the Great Lakes Renewable Energy Association and an intervener in the case.
“In this rate case, DTE tried to make solar energy uneconomical for homeowners and businesses. DTE knows they can’t compete with solar and don’t want to lose sales, so it is trying to eliminate the solar market in Michigan by raising fees and reducing the price they pay for solar energy,” Richter said. “The Commission wisely rejected this choice of either crushing the economics of rooftop solar or allowing the cap on participation to close the opportunity for homeowners and businesses to supply their own energy needs.”
The Commission also directed DTE to devise plans for a so-called “successor tariff” for future solar customers should it decide to cap participation in its distributed generation program.
That’s a problem, according to Richter, because the process would take a year, and DTE expects to exceed the cap sometime in 2023. Richter noted that when Consumers Energy temporarily hit its cap in 2021 before it voluntarily increased it, the company stopped accepting applications.
“And it created chaos in the solar industry. So it’s just the worst way this can go down,” he said.
Richter said there’s a legal “gray area” regarding whether the Commission can require a utility to adopt a tariff. He is hopeful that a stalled bipartisan state House bill introduced in 2021 that would eliminate the state’s solar cap entirely might be reintroduced and passed in the new Democratic-controlled Michigan Legislature next year.
“That’s gonna be the thing we want out of the state legislature next year,” he said. “But the fact that it’s majority Democratic doesn’t mean that will happen. The utilities have a lot of weight.”
The Commission also ordered DTE to develop a proposal to accommodate the company’s purchase of Renewable Energy Credits from its distributed generation customers. According to Richter, the idea behind this requirement is to compensate rooftop solar owners for the premium value of the green energy they place on the grid – that same premium that DTE asks its MIGreenPower program customers to voluntarily pay extra for on their monthly bills to subsidize utility-owned renewable energy projects.
“Because the distributed generation program is capped, we need another successor tariff for solar customers,” Richter said in a statement before the MPSC in August. Based on its rate-making authority… the MPSC should create a rider that allows solar customers to sell their excess energy to their utility at an equitable rate. This is vital for Michigan’s solar industry.”
Community solar and voluntary green pricing
The order pushed DTE one step closer to embracing community solar by directing the utility to supplement its voluntary green pricing application before the Commission with a straw proposal – an initial proposal that would be vetted before it becomes a final proposal – for a community solar project within 90 days.
The action would “serve as a starting point for the parties’ discussion and litigation in the voluntary green pricing proceeding,” according to the order.
Community solar projects are owned by third parties, allowing multiple customers to subscribe and receive a credit on their utility bills. Advocates say these projects allow low-income customers and those living in multi-family housing to benefit from renewable energy’s financial and environmental benefits.
Michigan law does not provide for community solar projects; two bipartisan House Bills introduced in 2021 that would change that have not progressed.
DTE has resisted community solar in favor of its MIGreenPower program.
Michigan League of Conservation Voters president Keith Cooley lauded the order.
“Everyone, low-income or not, can benefit from better access to renewable solar. DTE has been slow to accept community solar projects. In this order, the Michigan Public Service Commission told DTE to issue a proposal for community solar. That’s a move in the right direction.”
The Commission directed its Energy Affordability and Accessibility Collaborative to work to define equity-related terms and establish metrics for energy infrastructure. The order further directed DTE to work with MPSC Staff and stakeholders to explore the benefits and costs of hardening the company’s 4.8 kV distribution system.
The order comes in the wake of a report produced by advocacy groups We The People of Michigan, Soulardarity, and the Michigan Environmental Justice Coalition, charging that DTE had engaged in “utility redlining” by disinvesting in its older 4.8 kV distribution grids found in Detroit’s in low-income neighborhoods and older suburbs, in favor of investments in downtown and the suburbs. According to the report, the older system is less safe and has less capacity to host solar energy.
“This rate case decision was the positive result of people organizing together to say no more,” report co-author Alex Hill said. “The assessment of 4.8kV infrastructure, in particular, we see as a direct impact of our analysis on utility redlining by DTE. This rate case decision begins to hold the utility accountable in small but tangible steps.”
As DTE sought the rate hike, it sharply increased the number of customers it shut off electricity to for nonpayment in 2022.
In March, an analysis by Outlier and ProPublica showed that DTE’s shut-off rate during the COVID-19 pandemic outpaced all other Michigan investor-owned utilities. The utility disconnected electricity customers 176,923 times from January through September of this year – the most since at least 2013.
Friday’s order directs DTE to file a report detailing the company’s approach to enrolling customers in its Low-Income Assistance program, including current enrollment data from 2021 and 2022, within 120 days. The Commission directed its EAAC to follow up on the report with a discussion on Low-Income Assistance program enrollment and to submit a report and recommendations to the Commission.
Next year will be busy for consumer advocates. Richter points out that the sheer number of new dockets creates a massive workload for nonprofit advocates.
“It’s part of the advantage of utilities where are so many cases, and the cases are so enormous, and then there’s all the testimony. It’s just a lot of work and hard to keep up,” he said.
Koeppel said the evolving and expanding landscape of contested cases makes it challenging for frontline communities to maintain a voice.
“The question that order begs is, for a Commission that has indicated a greater commitment to defining a working definition of equity and using that to inform rulings, how is procedural justice going to be implemented to guarantee that impacted communities have a say in shaping those critical definitions?”