Overview:
-A ratepayer advocacy group says $10 million pales in comparison to DTE and Consumers' corporate earnings.
-Energy consultant says customers who lose power should receive automatic hourly credits.
-DTE says the order aligns with commitment to 30% outage reduction by 2029.
Last week, Michigan regulators announced financial penalties for DTE Energy and Consumer Energy if they fail to reach reliability metrics and incentives for meeting them.
Beginning in 2026, the Michigan Public Service Commission will impose $10 million in incentives and disincentives based on whether the companies meet targets such as reducing the length of power outages, fixing poorly performing circuits, or limiting the number of customers experiencing four or more outages a year.
Power outages are a longstanding problem in Michigan. Between 2000 and 2021, the state experienced the second-highest number of power outages in the country in which at least 50,000 residents lost power. Michigan power outages increased 78% between 2011 and 2021 compared to the prior decade.
MPSC Chair Matt Helms said that by focusing on a “relatively small number of performance metrics closely tied to the most acute pain points,” the penalties and incentives “will help accelerate the progress we’re already seeing in distribution and reliability improvement.”
Ratepayer advocate says utilities can avoid penalties with ‘marginal improvements’
Amy Bandyk, executive director of the Citizens Utility Board of Michigan, told Planet Detroit that $10 million is insufficient to compel the companies to improve their reliability, especially in comparison to their corporate earnings. In 2024, DTE reported net income of $1.41 billion and Consumers’ parent company CMS Energy posted net income of $947 million.
Utilities should not be offered incentives for substandard performance, Bandyk said.
“A utility can make marginal improvements in its reliability that still leave it among the worst utilities in the country on outage performance and not pay any penalty,” she said.
For example, a utility would need to improve its SAIDI baseline, or how long the average customer is without power, excluding major event days, by 5% to avoid triggering a penalty.
According to 2024 MPSC data, DTE and Consumers had SAIDI baselines, of 141 minutes and 180 minutes, respectively. A 5% reduction would put DTE’s baseline at 133.9 minutes and Consumers at 171 minutes, well above the national average of 119.1 minutes.
Bandyk also said the MPSC’s order double counts performance metrics for “non-major event days” or days without widespread outages, which may be the biggest point of concern for utility customers. She said this will make utilities less motivated to fix the key issues that lead to poor performance.
“Conditions that lead to outages on major event days as opposed to other days are the conditions that matter the most for reliability because that’s when most of the outages happen,” she said.
Michigan ratepayers deserve ‘top-tier reliability’: Nessel
Jackson Koeppel, an energy consultant who previously served as executive director for the Highland Park-based nonprofit Soulardarity, told Planet Detroit in June the $10 million in incentives and penalties the MPSC was proposing amounted to “couch cushion money” for the utilities.
A better method for improving reliability would be automatic, hourly credits for customers who lose power, Koepel said. He added that additional credits and benefits should be created for customers most affected by outages or who have climate or health vulnerabilities that make power outages even more of a hardship.
Utility representatives praised the MPSC’s order, saying it will build on their work to improve reliability.
“DTE Energy supports the framework’s focus on reliability, as it aligns with the company’s commitment of reducing outages by 30% and cutting outage time in half by 2029,” DTE said in a statement.
Consumers said in a statement: “We believe this new approach will reinforce our Reliability Roadmap that is already making Michigan’s electric grid more reliable.”
Michigan Attorney General Dana Nessel said in a statement that the MPSC’s order had largely adopted proposals for which her office advocated, but that more work is needed to “force meaningful improvements and responsibility from Consumers Energy and DTE.”
“I will continue to push for added energy consumer protections and to hold DTE and Consumers to a high degree of accountability, even when seemingly no other elected leaders will, because Michigan ratepayers deserve the kind of top-tier reliability for which they have been paying but not receiving.”
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