Can Michigan’s troubled utilities handle the climate crisis?

Recent hearings reveal the ‘elephant in the room’ – government and business forced to confront the climate crisis.
Electricity cables covered in ice after frozen rain phenomenon

Redford resident Nick Selewski was one of around 100 people at a town hall in Westland on March 13 to speak out about the multi-day blackouts that had hit the area especially hard, first during the ice storm on Feb. 22 and again on March 3 when a snowstorm hit the area.

In a phone call with Planet Detroit, Selewski pointed to DTE Energy’s 1.2 billion in profits for 2022 and its request for a 14% rate hike and questioned why they weren’t doing a better job providing power.

“You’re making that much money. You can invest in hiring more people, putting better equipment up there, and doing a lot more tree cutting,” he said. “But they want to raise our rates?”

Selewski said he had to navigate both outages without driving because of recent hip surgery. He also struggled to help his mother, who was recently hospitalized and lives in Westland.

During a March 15 hearing of the Michigan House Energy, Communications, and Technology Committee, Trevor Lauer, president and chief operating officer of DTE, said Westland was “one of the epicenters” for the recent outages. Around 700,000 DTE and Consumers Energy customers lost power during the February 22 ice storm.

Recent reporting suggests that Michigan’s warming winters create conditions more favorable to ice storms. The larger amounts of water vapor held by warmer air could drive more substantial ice accumulations – like what happened in February.

Beneath the talk of bill credits and “grid hardening,” the Lansing hearing showed the machinery of government and business confronting the climate crisis, with Rep. Erin Byrnes (D-Dearborn) referring to climate change as the “elephant in the room.” 

Michigan Public Service Commissioner Katherine Peretick presented data showing that wind and extreme weather events were increasing and said that utilities needed to prepare for these “increasingly predictable” events.

Officials and representatives for Consumers and DTE discussed paths forward, like adopting performance-based rates or increasing tree trimming. Since 2018, seven states have moved to performance-based regulation, which rewards or penalizes utilities based on factors like affordability, reliability, and emissions reduction.

But it’s unclear if substantive changes will arrive fast enough to keep up with the accelerating climate crisis.

Peretick stressed that the MPSC’s authority to take on these issues was “not boundless” and doesn’t allow the commission to make management decisions for utilities. However, it has the power to initiate some performance-based regulation.   

Mike Byrne, chief operating officer for the MPSC, said the Michigan Legislature has “pretty broad discretion when it comes to setting policy,” which could empower the commission to take more forceful action. 

Regulators are expected to adopt new service quality rules for Michigan utilities. Changes could include requiring faster power restoration following catastrophic power outages and increasing how much money is returned to customers if they’re without service for more than one or two days. 

The MPSC is also commissioning a third-party audit of the state’s electrical grid to determine to what extent the history of repetitive, lengthy power outages is attributable to the grid’s age and how much is the result of decision-making by utility executives.

Meanwhile, residents at the Westland meeting and the Lansing hearing made clear what was at stake. They raised concerns about the possibility of a mass casualty event if an outage occurs during a heatwave and said blackouts prevent them from keeping life-saving medications refrigerated.

“It’s potentially life or death,” Rep Kevin Coleman (D-Westland) said during the hearing.

Lauer responded to a question about helping vulnerable residents by saying that DTE has a total of 100 generators to assist customers and the company used some of these to help 90 residents who requested help during the ice storm.

“That’s unacceptable,” Westland resident Ali Abbas told Planet Detroit, noting that hundreds of thousands were without power. Abbas purchased his own generator because his parents both have health issues and need to use CPAP machines.

“They cannot be in the cold for four days,” he said, adding that his father has recurrent bronchitis, which can develop into pneumonia.

Buying a generator wasn’t the only cost Abbas incurred. Like many others, he works remotely and his internet cut out during the ice storm. He says he lost several hundred dollars in wages in addition to paying to replace the food in his refrigerator and to cover the fuel cost for the generator.

Keeping up with climate change

“The weather that we’ve gotten, it’s insane,” Abbas said of the storms and fallen trees he’s observed since moving to Westland eight years ago. He believes DTE needs to be held accountable for its failure to provide reliable service and prepare its grid for more extreme weather.

Since 2020, Michigan has been among the top five states for weather-related power outages and among the worst for restoring power. And a recent report from We the People Michigan argues that DTE’s disinvestment in low-income and minority areas has made outages especially bad in these communities, which they called “utility redlining.”

Peretick said that downed power lines caused by tree damage account for most DTE and Consumers Energy system outages. But she added that service interruptions were reduced by 74% in areas where DTE had trimmed trees in the last year, and the outages that did occur were 67% shorter.

“They were going with a fairly long trimming cycle, and their trimming standards were modest,” Douglas Jester, a consultant with 5 Lakes Energy, previously told Planet Detroit.

The Citizens Utility Board of Michigan wrote in a blog post that tree trimming is “a relatively inexpensive way to reduce outages.” Yet, CUB said utilities often favor more capital-intensive “grid hardening” projects because the state’s regulatory framework allows them to recoup these costs from ratepayers, likening the practice to buying a new car every time you get a flat tire.

DTE also said on its February earnings call that it was using a “lean” management strategy, delaying hiring and deferring maintenance. However, a DTE spokesperson told Bridge Michigan that these cuts did not involve the company’s tree-trimming program.

Before 2021, the company was on a 9-year tree trim cycle, while Minnesota’s largest utility, Xcel Energy, is on a 3-to-5-year cycle. The Lansing Board of Water and Light had very few outages during the ice storm and is on a 5-year cycle.  

At the hearing, Lauer said DTE had been “a fierce advocate for tree trimming,” investing $190 million in vegetation management in 2021 and $240 million in 2022. The company recently moved toward a 7-year trim cycle. Chris Laird, vice president of operations for Consumers, said the company was spending $100 million a year on vegetation management, also moving toward a 7-year trim cycle.

But these investments and other efforts, like moving some power lines underground, may not be enough to keep pace with the increasingly powerful storms hitting the state.

“We keep referring to these ice storms and these weather patterns that we’re seeing as historic or perhaps once in a generation, but we know that that’s simply not the fact,” Byrnes said. “This is literally the tip of the iceberg.”

Regulation and its limits

If there was a point of agreement during last week’s hearing, it might have been Lauer’s endorsement of “performance-based rates,” an approach that was also brought up by Rep. Joey Andrews (D-St. Joseph).

These rate-setting programs offer carrots and sticks to get investor-owned utilities to improve performance. But Amy Bandyk, executive director for CUB, said, “the devil is in the details.”

Bandyk said that until DTE and other utilities get their performance up to national standards, they shouldn’t be able to secure a higher return as part of a performance-based rate program.

“They should only be penalized for being worse than average,” she said.

One hopeful sign that Bandyk observed was Lauer’s statement that DTE wouldn’t increase customer bills to recoup the cost of credits issued because of the outage. If he keeps his word or legislation demands it, increasing these credits could significantly impact shareholders and incentivize utilities to improve reliability.

 The MPSC recently increased the credit for lengthy outages from $25 to $35, plus an additional $35 daily charge “beyond acceptable thresholds.” But CUB had requested a $2 an hour credit for the duration of all outages, which the MPSC called “not reasonable.”

Bandyk added that rooftop solar could also “put competitive pressure on DTE to do better.” Michigan legislators recently introduced legislation to allow homes and businesses to connect to community solar, letting them subscribe to a portion of off-site production and receive a credit on utility bills. 

Renewable energy advocates are hopeful legislators will also introduce a law to raise or remove the state’s 1% cap on distributed energy, which restricts the number of customers who can receive credits for rooftop solar.

Yet, Peretick stressed that the MPSC “is a creature of statute” and can’t involve itself in management decisions. For example, the MPSC couldn’t directly order utilities to improve tree trimming, at least with its current powers.

Bridget Vial, an organizer with the Michigan Environmental Justice Coalition, said better laws were needed to back up the commission’s work. She said the MPSC currently has a conservative interpretation of its power to determine outage credits, but stronger laws could require the commission to demand more. 

But it may be challenging to win significant reforms from a legislative body in which 140 out of 146 legislators received some form of a campaign contribution from DTE or Consumers in 2021. However, Michigan Attorney General Dana Nessel recently made comments to the MPSC proposing that investor-owned utilities provide more information on their political spending, which could ultimately affect ratepayers. She did this despite receiving thousands from DTE herself.

Meanwhile, poor service will continue to exact a price on Michiganders like Abbas. He says the pressure of caring for his parents and doing his job when he can’t count on his electrical provider has impacted his mental health. He’s also very concerned about climate change, watching how the escalating crisis has affected his native Pakistan. In 2022, powerful monsoons and melting glaciers left a third of the country under water.

Abbas wants to do his part and has received quotes for home solar, although he says it remains too expensive.

“I have two little girls,” he said. “And I want to leave a world for them.”


Our reporting 

runs deep.

Get the latest local enviro news in your inbox with Planet Detroit.

Scroll to Top