On Jan. 23, the Michigan Public Service Commission (MPSC) issued an order on DTE’s electric rate case (U-21534) that raised rates by about $217 million, increasing residential rates by 4.65%. That rate hike was only about half of what DTE asked for, but several steps not taken by the MPSC, (but proposed by groups including CUB) could have reduced it much further, potentially even removing the need for a rate increase.
Amy Bandyk, executive director of the Citizens Utility Board of Michigan, a ratepayer advocacy group, told Planet Detroit that the MPSC missed a chance to send a stronger message to the utility, whose grid management she called “woefully substandard.”
“It’s not a matter of having enough money to improve the grid, it’s a matter of what DTE does with it,” Bandyk said.
She pointed out that the MPSC approved most of DTE’s grid hardening measures but argued that the utility had failed to show these are a wise investment for customers.
For some more context, a witness for the Office of the Michigan Attorney General, the Michigan Environmental Council and the Natural Resources Defense Council had testified that about $274 million in annual spending on the distribution grid was not justified by DTE and should be disallowed by the MPSC. But the MPSC only ended up disallowing about $50 million.
In addition, CUB had testified that DTE’s return on equity (essentially the rate of shareholder profit it is allowed to charge customers) was too high and should be cut to 9.3%, a move that would have saved about $100 million a year for customers compared to the 10.5% return on equity that DTE requested. While the MPSC did refuse DTE’s request to increase the return on equity to 10.5%, the Commission did not cut it either, keeping the return unchanged at 9.9%.
But the MPSC did agree with CUB’s testimony in one important area. As MLive reported:
DTE had also asked for permission to charge ratepayers for the cost of certain billing credits it is required to issue customers who undergo repeated or prolonged outages, like those caused by weather events such as ice, wind or lightning. Regulators said no.
Advocates for residential customers with the nonprofit Citizens Utility Board of Michigan, celebrated the decision. “Such a standard would have essentially invalidated the already rather paltry system of outage credits, considering that weather is the biggest cause of outages,” said the group’s Executive Director Amy Bandyk in a statement.