State regulators quash DTE proposal to encourage customers to pre-pay their electric bills

 DTE positioned its pre-pay program as a way to help low-income customers manage their utility bills. Advocates said it would have eliminated customer shut-off protections.   

State regulators have rejected a DTE Electric plan to develop a prepay program that the company said would simplify the billing process, but critics say it seemed designed to skirt shut-off protections for struggling ratepayers and more easily disconnect service. 

The order rejecting the plan was issued in late December by the Michigan Public Services Commission, which regulates the state’s private utilities. The agency also concluded the program would saddle ratepayers with $12 million in new costs despite scant evidence of demand for prepay service, and it labeled the program’s alleged benefits “speculative, illusory, and not qualified.” 

The program was opposed by advocacy groups that intervened on behalf of consumers in the case before the MPSC. John Freeman, executive director of Great Lakes Renewable Energy Association which intervened in the regulatory case, said DTE’s likely “hidden agenda” behind the prepay program is the elimination of the customer shut-off protections. 

“This is the standard strategy of DTE,” he said. “They make proposals that sound nice, in this case to make it easier for working people to pay their bill, but once you look closer you see what DTE’s real agenda is. In this case, for DTE to circumvent the established rules and make it easier to disconnect homeowners that are having a hard time paying their electrical bill.”

DTE, the state’s largest utility with more than two million customers, disconnected service for nonpayment 80,600 times in 2020 and 178,200 times in 2021. It disconnects at a higher rate than all other state utilities and has consistently been under fire from consumer advocates who charge that the company’s ever-increasing rates and rules around shut-offs drive the problem.  

DTE painted a different picture in its plan, which it told regulators would have allowed customers to pay for electric consumption before energy use. The program would have provided customers with “increased visibility and control over energy usage, the ability to establish a payment schedule to suit their needs, a simplified billing experience, and the ability to make payments toward past due balances,” DTE told the MPSC in its filing. 

The company also told regulators the program would reduce stress for low-income customers, and those using the program would see their energy consumption drop by five to 14 percent.

But consumer advocates questioned the benefits, and the MPSC, in its order, noted a litany of problems with the proposal. Chief among the issues – the plan would have scrapped numerous customer safeguards against shut-offs.  

DTE asked the MPSC to eliminate protections that require 10-day notification of intent to shut off, multiple attempts to contact customers in the days before a shut-off, and information to be provided to struggling customers that included details of past due charges and assistance programs.  

Critics also questioned DTE’s claim that the program would benefit low-income customers. DTE said allowing customers to monitor their account usage and balance, then pay at their own pace instead of getting a monthly lump charge, would be easier on struggling ratepayers. But the MPSC said it agreed with consumer advocates that “facing shutoff in real time is much different than with post-pay and the threat of facing shutoff,” and does not constitute a benefit to low-income customers.

“The Commission is especially concerned about the potential harm to low-income [customers] should the Prepay Program and associated waivers be approved,” the MPSC added. 

The MPSC wrote that the plan more broadly “is likely to increase the cost to ratepayers,” including those who don’t enroll in the plan, and questioned the overall benefit. 

An administrative law judge presiding over the case noted that DTE “failed to provide any meaningful analysis of the expected benefits compared to the protections lost through a waiver of shut-off protections,” the MPSC wrote in its order. That raised questions over whether the “benefits outweigh the consequences.” 

DTE also failed to show evidence of interest in the program or its sustainability, the MPSC wrote. 

“The utility essentially expects to learn if the program is viable after it is implemented,” the MPSC wrote. 

In a statement to Planet Detroit, DTE said it is still reviewing the order. 

“DTE shares a mutual interest with the Michigan Public Service Commission in bringing affordable, reliable and clean energy to the people of Michigan,” the statement reads. “DTE proposed the prepay program as a voluntary program for residential customers to provide increased control over energy usage, the ability to establish a payment schedule to suit their needs and the ability to make payments toward past due balances.”

Freeman compared DTE’s tactics in this case with a recent rate case in which he said DTE also floated a plan that seemed good for ratepayers on the surface but contained a “hidden agenda.” 

In that case, DTE proposed doubling the limit on the proportion of energy in its service territory that can be generated by rooftop solar and other small-scale distributed energy sources. The limit is currently capped at one percent. 

But DTE’s plan also included changes to fees and reimbursement for energy that rooftop solar producers sent to the grid, Freeman said. The new math would have effectively made installing rooftop solar financially unfeasible. 

“Clearly, the hidden agenda was to undercut the positive economics of installing solar,” Freeman said. “You have to be a little cynical when you read something from DTE.”  

Michigan Attorney General Dana Nessel’s office called MPSC’s ruling a “big win for ratepayers.” 

“While programs such as DTE’s prepay proposal may appear harmless on their face, it is important to understand how the program is structured, what protections ratepayers are being asked to forfeit, how much the program will cost, and who will ultimately pay for the program,” Nessel said in a press release. 

“The structure and costs associated with this program were a bad deal for consumers, especially lower-income customers who might have found themselves forced into the program.”


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