Overview:
-Michigan's gas customers face soaring bills as utilities invest heavily in natural gas infrastructure, says the Citizens Utility Board of Michigan.
-Michigan's Healthy Climate Plan aims for 52% reduction in greenhouse gas emissions by 2030 and economy-wide carbon neutrality by 2050.
-DTE says pipeline replacements comprise a significant portion of its natural gas investments.
Michigan gas customers will see skyrocketing energy bills if investments in natural gas infrastructure continue, according to a report commissioned by the Citizens Utility Board of Michigan, a ratepayer advocacy group.
By 2050, the average DTE Energy gas customer will see their monthly bills soar by 120%, rising from $80.38 to $177.22; Consumers Energy ratepayers will pay 158% more, with bills climbing from $74.62 to $192.35 a month; and SEMCO customers will be hit with a 106% increase, their monthly bills rising from $62.68 to $129.12, according to estimates from the March report.
The study, assembled by DHInfrastructure, a public policy consulting firm, also estimates the three utilities will spend $57.6 billion on gas infrastructure by 2050. These investments may cost customers $2 to $4 for every dollar spent on account of utilities’ return on equity for shareholders, capital costs, and property tax increases driven by utility increases, according to the study.
Ongoing gas investments make it harder for Michigan to meet its climate goals, requiring steeper reductions from other sectors like industry that could be more difficult to decarbonize than home energy, according to James Gignac, Midwest senior policy manager for the Union of Concerned Scientists.
The 2022 MI Healthy Climate Plan looks to achieve economy-wide carbon neutrality by 2050, with an interim goal of reducing greenhouse gas emission by 52% from 2005 levels by 2030.
Yet natural gas is mostly methane, a greenhouse gas 28 times more potent than carbon dioxide at trapping heat in the atmosphere, although it persists for a shorter time period.
Further expanding the gas grid could also burden those who remain on gas with rising fixed infrastructure costs as other customers electrify their homes, the report finds.
“There is a significant risk of vulnerable populations bearing a disproportionate share of transition costs while facing greater barriers to accessing benefits of electrification,” CUB wrote in a statement on its webpage.
The report shows customer usage data shows that the number of gas customers for the three utilities increased between 2013 and 2023, but overall gas use for water and space heating declined while electricity use grew. Sales of electric-powered heat pumps, used for heating and cooling homes, have outsold gas furnaces nationally over the previous two years, according to a December report in Canary Media.
DTE spokesperson Chris Lamphear defended the company’s investments in natural gas in a statement to Planet Detroit. “A significant portion of this work is replacing legacy natural gas pipelines with durable, modern corrosion-resistant materials, which greatly reduce greenhouse gas emissions,” he said.
Gas is the most affordable form of energy for home use, especially when considering the costs of electrification, Lamphear said.
Consumers spokesperson Tracy Wimmer also said gas is an affordable energy source and the company is working to reduce emissions associated with gas delivery.
SEMCO did not respond to Planet Detroit’s request for comment.
Amy Bandyk, executive director for CUB, said the organization’s report argues gas is becoming more expensive, even assuming a conservative, business-as-usual scenario.
“Unforeseen events, like the war in Ukraine, can make gas much more expensive,” she said.
Michigan utilities spending more on gas with little justification, researcher says
Annual expenditures on gas infrastructure have ballooned in recent years, with DTE, Consumers, and SEMCO’s spending rising from $740 million in 2014 to $1.7 billion in 2023, the report finds. This is larger than the city of Detroit’s $650 million annual capital budget for government infrastructure, housing, opens space, transportation, and other priorities and fifteen times larger than the $116 million, in 2024 dollars, spent to address the Flint water crisis.
Customers pay for these investments by covering the capital costs as well as companies’ rate of return, which investor-owned utilities secure for shareholders on capital investments.
The cost of delivering gas to customers, as opposed to the cost of gas itself, has increased significantly in recent years, according to Brendan Larkin-Connolly, an energy consultant and primary author of the CUB study.
For example, DTE customers were paying a little over 20 cents per hundred cubic feet in delivery costs in 2011, but this number climbed to over 40 cents per ccf in 2024, Larkin-Connolly said.
Companies have legitimate reasons for investing in gas infrastructure for reliability and safety, he said.
He added that companies are incentivized to invest more in infrastructure to earn their rate of return for their shareholders and often “provide minimal evidence to support that each and every dollar spent is essential to maintain safety and reliability.”
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Gas dependency jeopardizes Michigan climate goals
Michigan will have to achieve much steeper emissions reductions from sectors like industry, transportation, and power generation if homes continue to use gas, Bandyk said.
The CUB report found that maintaining current levels of gas consumption would require all other sectors to reduce emissions by 56% to meet state emissions reduction targets, with these sectors needing to achieve negative emissions by 2050.
“Given the scale of these required reductions, it becomes clear that achieving Michigan’s climate goals will require significant changes to how natural gas is used and distributed throughout the state,” the report says.
Michigan buildings account for 18% of the state’s greenhouse gas emissions, the third most emitting sector behind transportation and power generation, according to the MI Healthy Climate Plan.
Gignac, with the Union of Concerned Scientists, said technologies already exist for reducing gas use and electrifying buildings, as well as energy efficiency upgrades that can lower overall energy use.
“If we miss opportunities to pursue those cost-effective steps, then we may be needing to do more costly measures in other sectors,” he said.