Michigan House Hearing Focuses on Accountability for Utilities Following Outages

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.

But while very apologetic in their words, the representatives from DTE and Consumers Energy were noticeably non-specific about how they should be held accountable.

“Our customers deserve to hold us accountable, this committee deserves to hold us accountable and so does the state,” DTE Electric President and COO Trevor Lauer said in response to questioning from Rep. Joey Andrews (D-St. Joseph) at the hearing.

But even while acknowledging past mistakes, Lauer avoided directly answering questions about any penalties that should be placed on DTE, instead returning to his claim that the utility needs more money to be able to invest into the grid to improve reliability.

For example, a number of committee members asked about how the utilities would compensate customers who suffered big losses during multi-day power outages. “How are we going to make these people whole?” Rep. Jenn Hill (D-Marquette) asked Lauer (up until her election to the Michigan House, Hill served on CUB’s Board of Directors.)

“I apologize for the outages. We know the hardships that have come with it,” Lauer said in response. “When we invest in the electrical system or clean energy, that is how profitability is made at electric utilities… what you should expect DTE and the other utilities to do is to continue to invest in the grid, to make this situation better to limit the duration of outages.”

But DTE and other utilities have had the power to limit outages and have not done so. They have not done a good enough job in the past investing into tree trimming, preventative maintenance and other practices that improve reliability. Michigan has lagged neighboring states on reliability metrics in large part due to grid maintenance that was needed but not performed in years past. “While the utilities have been taking actions to improve reliability over the last several years, our statewide reliability measures have gotten worse or remained stagnant,” MPSC Commissioner Peretick said in her presentation to the committee at the hearing.

Lauer himself said during the hearing that the utility only really accelerated their distribution grid investments seven years ago. Utilities, scientists and policymakers have known about the risks of severe weather increasing due to climate change for much longer than seven years. So if we couldn’t trust them to spend ratepayer dollars on the grid wisely in the past, why should we trust them to do it in the future?

Consumers Energy representatives also tackled questions about why, after the recent ice storm, the company only offered $25 bill credits for customers who lost power for days. Consumers Energy Senior Vice President of Transformation & Engineering Tonya Berry said that $25 was all the MPSC required them to provide, which is true. But Rep. Mike McFall (D-Hazel Park) showed the inadequacy of her response by pointing out that the company could have given more voluntarily (DTE, for example, offered $35 bill credits, which is still too small, but shows that the utilities could give more). The $25 credit “is a floor,” not a ceiling, McFall said to Berry.

Berry’s response also minimized the utilities’ own role in shaping what the utilities themselves are required to do. Over the past three years or so, DTE and Consumers Energy have both resisted CUB’s proposal for hourly bill credits that better reflect the value of outages, and instead pushed the MPSC toward a meager proposal for changing the reliability and quality standards that, as we have elaborated elsewhere on this blog, makes it even harder for some customers to qualify for bill credits after outages.

To give the utilities some credit, Lauer, Berry and Consumers Energy Vice President of Electric Operations Chris Laird said in response to questions that they were open to performance-based regulation, a type of regulatory approach that would be new for Michigan. CUB has long pushed for Michigan to more quickly adopt elements of performance-based regulation, in which the regulator sets targets for the utility’s performance (such as, for example, duration of power outages) and the utility is penalized if it does not hit those targets.

But Michigan ratepayers should take the utilities’ apparent openness to performance-based regulation with a grain of salt. Whether or not performance-based regulation actually benefits ratepayers depend on the details of how the exact performance targets are set, as well as the rewards and penalties that apply to those targets. Just like they did with the rules on bill credits, the utilities are likely to try to influence the process creating performance-based rules to make the targets as easy as possible for them to achieve. CUB and other stakeholders need to make sure that as they are developed, any performance-based rules make lives better for ratepayers.

One moment in the hearing poignantly showed how much is at stake here for people’s lives. Detroit resident Elouise Garley, an immigrant rights organizer for Michigan United, spoke about her experience as “one of the hundreds of thousands of Michiganders affected by DTE’s brutal and inhumane power outage,” she said. Garley explained in terrifying detail how she was stuck at home, sick with COVID-19, during a recent outage, and had no choice but to sleep in a makeshift bed in her kitchen, using her gas stove as her only source of warmth.

Garley is an immigrant from Liberia. “When I came to the USA in 2000, I never thought I would face a developing country crisis: frequent power outages,” she said. And yet, that is the level of service she has been receiving too often.

Hear more people’s lived experiences by watching the whole hearing here.