Michigan utility regulators approve electricity rate hike for DTE Energy customers - Detroit News
State utility regulators approve electricity rate hike for DTE Energy
Michigan utility regulators approve electricity rate hike for DTE Energy customers
Beth LeBlanc
Delta Township — The Michigan Public Service Commission on Friday approved a $368 million electric rate increase for DTE Energy customers for the coming year, about 60% of what the Detroit-based utility initially requested in February.
The increase will cost the average residential customer about $6.51 more per month on their electricity bill, state utility regulators said. But DTE argued the impact on customers' bills will be offset by more than half because of other recent cost savings realized by the company.
The new rates will be effective Dec. 15 for DTE's 2.3 million electricity customers in southeast Michigan and the Thumb area.
Electricity bills for the typical residential customer will increase 6.4%, according to the Michigan Public Service Commission, a state panel that regulates utility giants DTE and Consumers Energy.
Commissioner Katherine Peretick said DTE's additional investment in its electricity distribution area is “necessary” to reduce the "unacceptable" outages that have plagued Metro Detroit customers in recent years.
"The only way to improve is to fix the system," Peretick said. "We’ll be watching closely to ensure these investments have the intended effect of reducing the frequency and duration of outages in our state."
DTE argued the rates approved Friday were curbed by a decrease the company announced last month of about $300 million due to savings in the fuel and costs associated with the company's production of energy. Balanced against the November decrease, Friday's decision averages to an increase of about $2.65 per month for an average residential customer using 500 kilowatt hours, the Detroit-based utility said.
“Our customers demand and deserve improved electric reliability; the rate order will allow us to continue to invest in the grid as well as transition to cleaner energy," said Trevor Lauer, vice chairman and group president for DTE Energy.
Republican and Democratic lawmakers greeted the decision with criticism Friday.
Rep. Mike McFall, D-Hazel Park, said he was "appalled" the commission would allow DTE to push the "financial burden of long-overdue infrastructure upgrades to residents" based on reasoning that is "tired and clearly not made in good faith."
"This is despite DTE recording over $1 billion in net profits last year and after the company boasted about their $332 million 2023 Q3 earnings to shareholders," McFall said in a statement.
In February, DTE asked the commission to boost its total charges by $622 million annually, a few months after the commission approved a nearly $31 million increase in response to a $388 million request.
The $31 million increase, DTE said, amounted to about a 71-cent increase per month for an average residential user.
The $622 million increase would have amounted to roughly $12.46 more per month for an average customer, an increase of about 14%. The company later adjusted its request to $583 million.
While increasing grid reliability was one of the reasons cited for the rate hike request, the company said its efforts to comply with its own carbon reduction plans and the state's clean energy goals also came with costs.
Pushback on rate increase
Attorney General Dana Nessel's office has argued DTE's initial $622 million request was nearly twice as much as it needed. Nessel's office estimated DTE's revenue deficiency was at most $326.4 million and that the request by DTE was "the largest" the attorney general's office had ever seen.
Nessel said Friday she was pleased the commission listened to the objections of her office but was disappointed regulators didn't adopt other recommended metrics and benchmarks against which DTE's performance could be measured.
“I recognize that $368 million is still a tremendous rate increase and is too high for many ratepayers, especially right before the holidays," Nessel said in a statement. "I will remain a vocal proponent for the interests of utility customers and urge the Legislature to pass measures compelling DTE to demonstrate this money is being utilized to ensure more reliable service and not to enrich its shareholders."
McFall said he is exploring "legislative avenues" to reform the commission's approval process after his district is consistently offered promises while "energy reliability continues to deteriorate."
"We cannot continue to allow DTE, aided by the Michigan Public Service Commission, to arbitrarily raise rates, which hurts our most vulnerable citizens while DTE simultaneously gloats about record profits to their shareholders year after year," McFall said.
Rep. Mark Tisdel, R-Rochester Hills, also criticized the increase Friday, arguing those rates would only increase in the years ahead as Michigan imposes a law signed this week requiring the state to have 100% "clean" energy by 2040.
"As the state ramps up new energy requirements, Michiganders’ electricity prices will keep ramping up, too," Tisdel said in a statement. "We’re already seeing rates rise because of previous ‘clean energy’ regulations, and burdensome new laws will require costly investments and make electric bills more expensive for residents and local businesses."
Howell resident Julie Stachecki Johanningsmeier told commissioners Friday that she supported the rate increases "as long as the funding that goes to that tree trimming funding surge is not simply to prune more miles, but that we are adamant about using best management practices to navigate the natural resource challenges that we have out there."
She also pleaded for sufficient wages for the tree trimmers and utility workers who work in extreme conditions.
"It is this workforce that keeps the power flowing, and I hope your oversight is very close to make sure that some of that funding goes to boots on the ground, upon which this entire grid rests," Stachecki Johanningsmeier said.
Commission grants other DTE requests
The commission's Friday order granted DTE's requested debt-to-capital structure of 50%-50% but lowered the company's approved return on equity from the requested 10.25% to 9.9%.
DTE is expected to make more than $350 million between 2024 and 2025 in investments in the distribution system and distribution grid, including breaker replacements, underground residential distribution replacements and circuit conversions. The two-year period allows for potential adjustments based on an ongoing distribution system audit, the final report for which is expected in 2024.
More: DTE-tied nonprofit quietly gave $2M to Michigan Democrats ahead of energy work
The commission also approved about $2 million for a pilot project through DTE giving $1,500 to certain households that purchase electric vehicles costing less than $50,000. The commission approved an acceleration of the utility's "tree trimming surge" to prevent trees and branches from falling on power lines during wind storms.
The commission's Friday decision rejected requests for $133 million in information technology costs and $346 million in capital costs because the panel found the costs "were insufficiently justified."
DTE has petitioned successfully for rate increases over the past decade and, earlier this year, the utility implemented "time of use" rates that increased rates during peak hours. Part of Friday's order required a study of the impact of the new rates during peak hours on low-income customers.
Related Knowledge Center: ENERGY BASICS: electricity
Electricity is a secondary energy source: it is generated through the conversion of primary energy sources such as natural gas, coal, solar, hydropower, and wind. Electricity’s versatility is not cost-free: a substantial amount of energy is lost in its generation and the cost of storage is high, compared with fuels such as coal, oil and natural gas. The economics of battery technology hold the key to expanded use of renewable sources to generate electricity.