Consumers Energy asks to raise electric rates $436M, the most in decades

LANSING, MI – Consumers Energy wants to raise electric rates by $436 million, its largest ask in at least 20 years.

The for-profit utility, Michigan’s second-largest power provider, kicked off the process of asking regulators permission for the hike on Monday, June 2 — the very first day this year it was legally able to under the law.

“This is at least among the largest rate hikes Consumers has ever requested, if not the largest itself,” said Michigan Attorney General Dana Nessel in a statement released Monday afternoon.

Nessel said her office would scrutinize the rate hike request and would not be deterred from protecting Michigan utility ratepayers “from corporate greed and endless, increasing rate hikes.”

Michigan law prohibits utility companies from filing new rate requests more frequently than once every 12 months. Consumers’ application on Monday came 367 days after its last one — the first business day after the one-year clock reset.

This will be the sixth year in a row Consumers sought to raise power rates. The utility says the increase is necessary to continue fulfilling its “reliability roadmap” meant to dramatically reduce outages by replacing aging power lines, transformers and other equipment.

However, consumer advocates argue the utility’s plan to improve service reliability is “like building a new house instead of fixing the roof,” according to comments filed with the regulatory Michigan Public Service Commission (MPSC).

Amy Bandyk, executive director of the Citizens Utility Board of Michigan, said the nonprofit’s analysis shows there is no correlation between how much the utility spends and reliability outcomes.

Read more: ‘Burden’ or path to reliability? Michigan utilities seek more frequent rate hikes

“The utility’s strategy is driven less by what is cost-effective to improve reliability and more by what can they spend on that will provide a return to their shareholders,” Bandyk said.

If awarded in full, the requested rate hike would increase monthly power bills some 13% for residential customers.

The Jackson-based power company is unlikely to get permission to do that though, as regulators regularly slash utility requests before approving them, sometimes by as much as half.

Monday marks the beginning of a 10-month legal process called a rate case, during which business groups, consumer advocates and others question aspects of the requested increase, frequently seeking to reduce it.

Consumers also wants permission from regulators to implement an additional surcharge to collect $24 million from customers for spending deferred during a previous rate case.

The MPSC approved the company’s current residential electric rates less than three months ago. The utility then raised rates nearly $154 million beginning in April, a 2.79% hike on its residential customers’ monthly bills.

The company and fellow utility giant DTE Energy have taken flak from consumer watchdogs like AG Nessel for seeking to increase electric rates by eye-popping amounts on a near-yearly basis.

Officials with the utilities contend the money is needed to update the aging electric grid and transition to cleaner power sources.

In recent years, large swaths of Michigan residents often find themselves without electricity service after passing thunderstorms and winter storms.

This latest rate hike request by Consumers was seemingly influenced by a 2024 deep-dive audit, which Michigan regulators commissioned to investigate outage problems plaguing both DTE and Consumers.

“This request is really focused on improving our reliability to customers,” said Brian Wheeler, utility spokesperson. “Strengthening the system to the point that we get power back in 24 hours or less, and fewer outages on the front end even when we get bad storms.”

The utility credited its investments for some progress in 2024 in improving a reliability track record that has contributed to Michigan’s place near the bottom nationwide for keeping the lights on.

The MPSC ordered the audit of the two biggest Michigan power providers following widespread power outages because of major ice storms in February 2023 and a series of tornadoes six months later in August 2023. Hundreds of thousands of Michigan residents were affected by outages that year.

In the audit of the utilities, a major recommendation for Consumers was to accelerate its pace of clearing power lines of trees, the top cause of outages. Some parts of its system hadn’t been touched in 20 years.

After previously pushing back on aspects of the audit recommendations, in the Monday filing the utility said it proposes to ramp up its line clearing to achieve a five-year cycle on major parts of its grid.

It was previously moving toward a seven-year cycle, meaning each mile of line would be cleared once every seven years.

Wheeler said in addition to the accelerated pace of tree trimming, Consumers proposes to place 50 miles of low-voltage lines underground in areas with a history of reliability woes. He said the utility completed 10 miles of “undergrounding” in a pilot project last year and now wants to expand the effort fivefold.

The rate increase proposal — and many other elements of the request — will be vetted over the coming months before MPSC regulators. They will likely rule next April, and new rates wouldn’t take effect until after that time.

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