DTE Energy (via Shutterstock)

State regulators approved a $368 million increase in electric rates last week for DTE Electric customers. Typical residential customers will see a jump of 6.36% or approximately $6.51 on their electric bills starting on Dec. 15, according to the Michigan Public Service Commission, which regulates investor-owned utilities.

According to Trevor Lauer, DTE’s vice chairman and group president, that number could be lower. In a statement, Lauer said customers would effectively see an increase of $2.56 per month, citing a reduction in fuel costs of $300 million in 2024 that he said will offset customer bill increases.

“Our customers demand and deserve improved electric reliability; the rate order will allow us to continue to invest in the grid as well as transition to cleaner energy,” Lauer said.

The approval is 40% less than the $622 million initially requested by the utility, which argued that it requires the additional funds to invest in clean energy and harden the electrical grid. 

Intervenors expressed a mixed reaction to the decision, praising increased transparency and accountability measures while criticizing the Commission’s decision to maintain the utility’s return on equity rate (ROE), which guarantees profits for shareholders.

And some advocates called on the Commission to deny all or most of the requested increase, as it did in the company’s 2022 rate case, citing the DTE’s poor reliability performance and already higher-than-average rates. In 2022, the Commission approved just 90% of the commission’s request of $388 million.

“Any increase to residential ratepayers is unjust, as the burden will fall most heavily on low-income communities and communities of color who already pay a disproportionately high share of income on utilities,” Rafael Mojica, program director for advocacy group Soulardarity, said in a statement.

In its order, the Commission mandated DTE track and report its grid investments over two years and analyze reliability based on customer demographics.

Jackson Koeppel, an independent energy consultant and intervenor in the case who has previously called for transparency on DTE’s reliability performance across race and class,  praised these measures, along with another measure requiring DTE to delay transitioning low-income ratepayers to time-of-day rates and to study the impact of those rates on low-income customers.

Most DTE customers transitioned to time-of-day rates in March. The rates charge a premium for electricity on weekdays from 3 p.m. to 7 p.m. between June and September when demand is highest.

Koeppel criticized the Commission’s decision to preserve the ROE rate, holding it at 9.9%. DTE had requested an increased rate of 10.25%, while intervenors sought to lower the rate.

In an October proposal for decision, administrative law judge Sharon Feldman recommended reducing the ROE rate to 9.8% and stated that a reasonable rate could go as low as 8.8%.  

Advocates released an analysis last week demonstrating that every basis point decrease in the ROE could save approximately $1 million in customer rates. In its order, the Commission cited “high inflation and rising interest rates” as the basis for its decision to hold the ROE steady.

Advocates have called on the Commission to link rate decisions to utility performance and reliability metrics, known as performance-based ratemaking. The Commission’s Financial Incentives and Disincentives workgroup, convened in April, is expected to release its recommendations on this topic later this month or early in 2024. 

In the order, the Commission said it was premature to consider poor reliability performance in this rate case, given the ongoing workgroup, but that it could consider reliability as a factor in future rate decisions.

Citizens Utility Board President Keith Cooley praised the order’s requirements for more accountability on grid investments. 

“DTE needs to be held accountable and prioritize reducing outages for its customers over earning profit for its shareholders,” Cooley said in a statement. “CUB is hopeful that this decision, as well as the MPSC’s order in DTE’s last rate case, indicate that the utility is being held to a higher standard of accountability than it was in the past.”

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Nina Misuraca Ignaczak is an award-winning Metro Detroit-based editor, journalist, and documentary filmmaker. She is the founder, publisher, and editor of Planet Detroit, a digital media startup focused on producing quality climate, health, and environment journalism that holds power accountable, and spotlights solutions. Planet Detroit has received awards and recognition from the Society for Professional Journalists Detroit, the Institute for Nonprofit News, and LION Publishers since its establishment in 2019. Prior to her journalism career, Nina worked in urban planning in local government and nonprofit sectors, holding a Master of Science in Natural Resource Ecology and a Bachelor of Science in Biology from the University of Michigan, Ann Arbor.