DTE CEO details five-year, $9 billion grid improvement plan - Detroit News
DTE CEO details five-year, $9 billion grid improvement plan
After 'most expensive storm in history,' DTE vows to invest in grid improvements
Jordyn Grzelewski Kayla Ruble
A February ice storm that was the biggest to hit Michigan in half a century, resulting in mass power outages, was the "most expensive storm in history" for the state's largest electric utility, according to DTE Energy Co. CEO Jerry Norcia.
The utility, which provides electricity to 2.3 million customers in southeast Michigan, faced intense criticism after the Feb. 22 storm left some 630,000 customers without power for days, including thousands whose power was out for more than a week. DTE reported that the storm brought down 3,000 wires across its distribution system. The following week, with thousands of customers still without power, a second winter storm hit the state, resulting in power outages for more than 226,000 DTE Energy customers.
The cost of the February ice storm for DTE was $200 million in cash, Norcia told The Detroit News editorial board in an interview Tuesday. He detailed a five-year, $9 billion plan to build a "grid of the future" and prevent such incidents from happening again.
The $9 billion plan expands on work DTE already is carrying out under its current five-year, $5.4 billion grid improvement plan. A key component of the current plan was an $800 million "enhanced" tree-trimming effort that is now in its fifth year.
Over the next five years, Norcia said, DTE will invest an average of $1.8 billion a year, an increase driven by worsening weather patterns and an anticipated increase in demand for electricity from the accelerating switch to electric vehicles.
“It’s becoming abundantly evident, based on wind velocities (and) these historic storms that are starting to pile up on us every several years," he said, "that we have a new reality and that we need to build a grid that can handle that.”
DTE's strategy to deliver better results to customers in Michigan — which historically has ranked among the worst of U.S. states in terms of outage frequency and their duration — includes a continuation of its tree-trimming program, a plan to maintain its equipment on a five-year cycle, rebuilding roughly the eldest one-third of its system, and investing heavily in automation of the grid. According to a 2019 report from the Energy Information Administration, Michigan ranks fourth nationally for the highest average of power outages annually.
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Norcia explained that of the roughly 46,000 miles of circuitry that DTE uses to distribute power to customers across Michigan, about one third is currently underground, another third uses a higher-voltage system that is more capable of meeting increased demand, and the remaining third is slated to be rebuilt and brought up to a higher voltage level.
That effort — which could take up to two decades — involves assessing how much of the system DTE can afford to put underground, a method that protects from high winds and falling tree limbs but is expensive to undertake.
DTE is planning to conduct a pilot program in Detroit during which it will underground about five miles of its system over a 12-month span to see if it can bring costs down enough to make under-grounding feasible on a larger scale.
But another strategy may drive improvements in a shorter period of time: installing more than 10,000 smart devices on the grid that are capable of isolating outages. In the coming years, DTE plans to drastically increase what today is about a 10% to 15% grid automation level.
“These smart devices act like valves, like water valves," Norcia said. "You can isolate the outage and reroute the power around the damage.”
The goal of these strategies is shortening outage duration. Norcia noted that states such as Florida, California, Texas, New York and New Jersey also deal with challenging weather, but perform better than Michigan on outage duration — in part because their grids are almost entirely automated.
“We’re going to keep doing that for likely a decade or more until the oldest parts of our system (are) rebuilt and it’s fully automated," Norcia said of DTE's plans to invest, on average, about $1.8 billion a year into grid improvements. "And we will be as storm-proof as places like Florida. They still experience outages, but the outages are shorter.”
He added: “We’ll start to move towards median, I would say, in four years. And then I think we’re going to move towards best-in-class in the handful of years after that, as some more of modernization-type efforts start to take hold. It doesn’t mean that people are not going to experience outages, but they’re going to be shorter in duration for a lot of the customers.”
DTE is currently seeking approval for a rate hike that would amount to a roughly 13% increase for the average customer, with the utility saying it needs to invest in infrastructure improvements to improve power reliability. If approved, the rate increase would add on about $12.50 to the average bill and would bring in an additional $622 million in revenue. In November 2022, the state approved a 0.78% rate increase for DTE customers.
Of the pending rate case that DTE currently has in front of the Michigan Public Service Commission, Norcia said that if the company doesn't get the increase it's seeking it would "put significant pressure on the ability to invest."
Critics of DTE and Consumers Energy Co., the state's two largest electric utilities, have argued that Michigan officeholders are not holding the companies accountable on correcting a pattern of failures because they rely on the utilities' political contributions.
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