Citizens Utility Board of Michigan

Consumers Energy’s offices at One Energy Plaza, Jackson. Source. Licensed Under Creative Commons License CC BY-SA 4.0.

On March 1, the Michigan Public Service Commission (MPSC) approved Consumers Energy’s latest electric rate case with an order that cut the rate increase by about 45% compared to what the utility had proposed. During the MPSC’s meeting Commissioner Alessandra Carreon explained one reason why the utility did not get all the spending approved for cost recovery that it wanted: “the company does not always demonstrate how each dollar spent toward restoration actually translates to shorter outages,” she said.

This lack of specificity about spending on the grid is a trend that goes well beyond this most recent rate case.

Photo by Brendan Wood, licensed under Creative Commons Attribution-ShareAlike 2.0

Regulations that punish utilities for poor performance is perhaps what Michiganders need the most to get more accountability and better electric reliability. But utilities are steering the regulatory process to craft new regulations toward weak and self-serving rules. Now that process is getting the spotlight it deserves with a recent Detroit News article that reports on how the Citizens Utility Board of Michigan, a number of community and environmental groups, municipalities around the state and more are registering their disapproval of the Michigan Public Service Commission (MPSC) Staff’s proposal for financial incentives and disincentives linked to utility performance on reliability.

The new Utility Performance Report for 2023 is the latest edition of CUB’s annual series reporting federal data on how Michigan electric and gas utilities stack up to utilities around the country on performance on key reliability, affordability and environmental metrics (Blog posts here and here provide some interesting detail about last year’s report).

Source: JK Nair.

A promising sign recently came in DTE’s pending electric rate case when an administrative law judge released a strongly-worded proposal for decision (essentially a recommendation for the Michigan Public Service Commission [MPSC]) finding that nearly half of the rate hike that DTE is asking for should be rejected. The judge agreed with arguments from CUB and other intervening groups that DTE’s plans for spending on the grid have essentially disregarded cost-effectiveness as a goal.

Photo by Brendan Wood, licensed under Creative Commons Attribution-ShareAlike 2.0

The Citizens Utility Board (CUB) of Michigan is working to ensure that penalties on utilities for poor electric reliability are paid to Michigan residents who are most harmed by power outages and that utilities do not get rewarded for substandard performance as part of a proposed new regulatory construct.

Credit: Matthew Paul Argall. Licensed through Creative Commons.

CUB has been arguing for years that a key part of the solution to Michigan’s problem of poor electric reliability and high energy costs for customers has to be performance-based regulation: rules that hold utilities accountable by financially penalizing them if they fail to perform well on metrics like the number of outages. Now, the Michigan Public Service Commission (MPSC) is taking some of its most concrete steps yet to create performance-based regulation in Michigan.

New expert witness testimony filed in DTE’s latest electric rate case exposes how the utility’s proposed rate hike, one of its biggest ever, does not deliver value to customers and fails to take the steps needed to turn around DTE’s abysmal record on reliability.

The Michigan Public Service Commission (MPSC) held three town hall meetings this week where they heard hours of testimonials, many of them filled with outrage, about the recent severe power outages. Along with the Michigan House committee hearing last week and a Michigan Senate committee hearing on March 23, the response to the performance of DTE Energy and Consumers Energy during and after the storms continues to be eventful. Before we get into the meetings, we highly recommend anyone interested in these issues read this recent story in the Detroit Free Press by Keith Matheny, which gives a great overview of the data CUB has presented showing that the poor reliability in Michigan is likely the result of the utilities’ performance, and this recent MLive story by Sheri McWhirter, which details the audit the MPSC is planning that will confirm the root causes of Michigan’s reliability problems. 

After the recent severe power outages across southeast Michigan, many Michigan lawmakers called for answers from DTE and Consumers Energy for their unacceptably poor electric service. The first major step in getting those answers came at a lengthy hearing of the Michigan House Energy, Communications and Technology Committee on March 15. Among those who testified were representatives of DTE and Consumers Energy, residents telling powerful stories about how power outages have affected their lives and Commissioner Katherine Peretick of the Michigan Public Service Commission (MPSC).

Despite the variety of backgrounds, a common theme among those testifying was accountability. Who are the utilities accountable to when the power continually goes out? Is it their customers? Their shareholders? Regulators? And how should they be held accountable going forward?

CUB of Michigan has been insistent for years that the biggest barrier to improving reliability is the lack of accountability for utilities for their poor performance. Questions asked by several members of the committee showed that those lawmakers are sick of excuses by the utilities and want to take action. 

Source: JK Nair

In its newest rate case, filed earlier this month, DTE, the largest electricity provider in Michigan, proposes a 13.9% residential rate increase. That rate hike is among the biggest proposed by a Michigan utility in the past several years, but it also represents a slap in the face to DTE customers, as well as the Michigan Public Service Commission (MPSC).