Overview:

- Michigan regulators approved a $217 million electric rate hike for DTE Energy, significantly less than the $456.4 million the company requested. This hike will increase the average customer's bill by $4.61 monthly.
- The Citizens Utility Board of Michigan criticized the decision, noting the Commission's failure to reduce DTE's return on equity, which benefits shareholders at customers' expense.
- The Commission also missed an opportunity to address the utility's 'woefully substandard' grid management, as highlighted by the ratepayer advocacy group.

Michigan regulators approved a $217 million electric rate hike for DTE Energy Thursday, overshooting Michigan Attorney General Dana Nessel’s recommendation for a $139.5 million increase.

The approved amount was 52% less than the $456.4 million increase the company had sought. The Michigan Public Service Commission said in a statement that the increase will add $4.61 to the average customer’s monthly bill.

At a Thursday meeting, MPSC commissioners said the increase would pay for things like improved tree trimming and investments in power poles and substations. 

Amy Bandyk, executive director of the Citizens Utility Board of Michigan, a ratepayer advocacy group, told Planet Detroit that the MPSC missed a chance to send a stronger message to the utility, whose grid management she called “woefully substandard.”

“It’s not a matter of having enough money to improve the grid, it’s a matter of what DTE does with it,” Bandyk said.

She pointed out that the MPSC approved most of DTE’s grid hardening measures but argued that the utility had failed to show these are a wise investment for customers.

Bandyk added that CUB was disappointed the Commission didn’t reduce DTE’s return on equity, which generates profits for shareholders from customers’ bills. The company had requested a 10.5% return, but the MPSC left it at 9.9%. This return is still higher than the 9.6% industry average for electric utilities with rate cases decided in 2023.

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Commissioners say grid investments are targeted and necessary

MPSC Commissioner Katherine Peretick said during Thursday’s meeting that rising demand for electricity called for more investment and that the Commission had worked to ensure the correct investments were being made

“We need to be able to understand exactly how customer dollars will be spent to be comfortable approving any rate increases,” she said.

Peretick said DTE had failed to justify certain costs, including a pilot program to bury power lines. But the utility provided adequate justification for investing in tree-trimming, pole top maintenance and substations, she said.

MPSC Chair Dan Scripps said they had seen improvements in DTE’s overall reliability, including reductions in the time customers went without power and the number of customers seeing repeated outages in a year. However, such improvements come after years of poor reliability. Data from the U.S. Energy Information Administration in 2023 showed DTE was one of the worst utilities in the nation for the time it took to restore power following an outage. 

A DTE spokesperson told Planet Detroit that customers would not see an overall increase in their bills because of an adjustment to the power supply cost recovery (PSCR) factor, which is used to reconcile changes in the price of power purchased by the utility.

Bandyk said this is technically correct. However, she said that the change in the PSCR stems from the falling price of natural gas and isn’t connected to the rate case.

“That’s a temporary factor and could change in future years if and when gas prices increase again,” she said. “This rate increase approved by the Commission today, however, is a permanent rate increase.”

Nessel says frequent rate hike requests an “abuse” of the system

The most recent rate hike follows the approval of a $368 million electric rate increase in 2023 and widespread concern about energy affordability and the frequency of DTE’s rate hike requests.

In September, DTE ratepayers filled the auditorium at Detroit’s Mumford High School, complaining of the costs incurred by past hikes, peak hour rate increases and power outages that forced them to replace the food in their refrigerators and pay for hotels.      

Northwest Detroit resident Emma Harris told Planet Detroit at the time that she was there to push back on regular rate increases and ongoing reliability issues.

Harris spent around $600 to stay in a hotel during the ice storm that knocked out power for days in 2023 and around $1,500 replacing food that spoiled in her refrigerator during subsequent outages. She doubted that DTE would use the money from another increase to improve reliability.

DTE’s latest rate hike request also elicited sharp words from the Michigan Attorney General, who said the company was preparing new rate hike requests before it knew the outcome of pending cases. Over the last two decades, the frequency of DTE’s rate hike requests has fallen from more than two years to less than 17 months.

“While this may be good for company shareholders, it is an abuse of the ratemaking system, places a continuous burden on Commission and intervenor resources, and most importantly creates an ever-increasing demand on DTE Electric’s customers, specifically its most vulnerable low-income customers,” Nessel said in a brief submitted as part of the rate case.

Bandyk made similar comments in February, saying frequent rate cases make it difficult for consumer advocacy groups to find the resources to intervene successfully.

“Filing more frequently gives them more opportunities to win higher rates against a more stretched-thin opposition,” she said.

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Brian Allnutt is a senior reporter and contributing editor at Planet Detroit. He covers the climate crisis, environmental justice, politics and open space.