Overview:
-The Michigan Public Service Commission is deliberating how to quantify clean energy costs and allocate credits, a decision that could reshape utility bills and the pace of Michigan's clean energy transition. At the heart of this debate is the "transfer price," a benchmark for fossil fuel electricity costs.
-If renewable projects exceed this price, utilities might pass the extra cost to consumers.
-Environmental advocates urge the inclusion of carbon capture costs in this price to accurately reflect the true expense of "clean" fossil fuels. Utilities say the current system works just fine.
-Scroll down to see how you can get involved.
Michigan passed a new law in 2023 that says utilities must increase their use of clean energy sources. By 2040, 100% of the electricity sold in Michigan must come from clean energy, like solar, wind, and nuclear.
Now, the Michigan Public Service Commission, which oversees utilities like DTE Energy and Consumers Energy, is deciding how to measure the cost of clean energy and how utilities get credit for using it. That process could change how much you pay for electricity and how fast Michigan switches to clean energy. A new MPSC report outlines the debate so far.
Here’s a cheat sheet to help you understand this complex business and how to weigh in.
What is a ‘transfer price’?
A transfer price is a number the state uses to estimate how much it should cost to make electricity from fossil fuels, like natural gas. It’s a benchmark, and it’s used to calculate the incremental cost of producing renewable energy.
This number helps the state figure out whether renewable energy is more expensive or cheaper than fossil fuels. For 2025, the MPSC approved a transfer price of $65.60 per megawatt-hour based on the estimated cost of electricity from a new natural gas combined-cycle plant.
This value is important because if a renewable energy project, like wind or solar, costs more than the transfer price, the utility may charge the difference to ratepayers as part of its Incremental Cost of Compliance. If it costs less, customers may see lower charges.
Why do renewable energy advocates say?
Right now, Michigan uses natural gas prices to set the transfer price. But under the new law, natural gas doesn’t count as clean energy unless it uses special equipment to trap carbon pollution known as carbon capture and storage, or CCS.
Environmental groups say the cost of that equipment should be included in the transfer price to reflect the real cost of “clean” fossil fuels. If it’s not included, renewables might look more expensive than they really are. Advocates are proposing an additional $22.66/MWh to account for the cost of CCS.
What do utilities say?
DTE and Consumers say it’s too early to change the rules. They argue that carbon capture isn’t common yet, and they don’t want to plan for those costs before it’s required. They also say the current method is working fine for now.
What would this change mean for your bill?
The report includes a scenario:
- A utility signs a renewable energy contract at $90 per MWh.
- If the transfer price is $65.60, the utility could charge customers $24.40 per MWh to cover the difference.
- If the transfer price were $85 per MWh (closer to the true cost of natural gas with CCS), the extra charge drops to $5 per MWh.
So raising the transfer price could lower the surcharge on your electric bill for each new renewable project.
How does the state track the amount of renewable energy being built and used?
Michigan uses RECs, or Renewable Energy Credits, to track how utilities are complying with the law’s requirement to produce clean energy. RECs are like proof that a utility made or bought renewable electricity. The credits are recorded in a system called the Michigan Renewable Energy Certification System.
Each time a utility makes 1 megawatt-hour of clean electricity, it earns 1 REC. Utilities need to retire these RECs in the state’s system to show they’re meeting state goals.
They can also earn extra RECs, called incentive RECs, for doing things like:
- Delivering clean energy during peak hours (when demand is high), or
- Storing clean energy and using it later when it’s most needed.
Under Michigan’s law, utilities must retire RECs equal to:
- 15% of electricity sold each year through 2029
- 50% from 2030 through 2034
- 60% in 2035 and beyond
RECs can be saved (banked), traded or sold, or retired to meet state requirements.
What does it mean to ‘retire’ a REC?
When a utility uses a REC to show it met a clean energy rule, the REC is “retired.” That means it’s marked as used and can’t be traded or reused.
So in short:
- RECs created = clean energy made
- RECs retired = clean energy used to meet state goals
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What else is being debated?
Some people want to change the way “peak hours” are defined. The current definition comes from 2008 and may not reflect when energy is actually needed the most.
There’s also a debate over how to count stored energy, such as in batteries. Should utilities get full credit for stored energy if it didn’t all come from clean sources? Some say no.
What happens next?
The MPSC will make a final decision by Sept. 1, 2025. Their choices could affect:
- How fast Michigan shifts to clean energy
- How much credit utilities get for using storage
- Whether customers pay more, or less, for renewable power
🗳️ Civic next steps: How you can get involved
Why it matters
⚡ Decisions like this affect your energy bills, how fast Michigan shifts to clean power, and who carries the costs.
Who’s making decisions
🏛️ Michigan Public Service Commission: Case No. U-15800
How to take civic action now
- 📅 Attend a public MPSC meeting: michigan.gov/mpsc
- 🌱 Follow advocacy groups like the Michigan Environmental Council or 5 Lakes Energy
- 📩 Email comments to: mpscedockets@michigan.gov (mention Case No. U-15800)
- ✉️ Mail comments to: Executive Secretary, MPSC, P.O. Box 30221, Lansing, MI 48909
- 📣 Ask your utility how they plan to meet clean energy goals
What to watch for next
🗓️ Final decision expected by Sept. 1, 2025
Civic impact
🌍 Staying engaged with the MPSC process is one way residents can shape Michigan’s energy future.