Michigan Regulators Reward DTE for Poor Reliability with Large Rate Hike

Ann Arbor, Michigan, December 15, 2023.  On December 1, the Michigan Public Service Commission (MPSC) granted DTE Electric a $368 million rate increase, effective today. A typical residential customer using 500 kilowatt hours of electricity per month will see an increase of $6.51, or 6.38%, on their monthly bill. While a portion of this money will be invested in infrastructure improvements, the urgently needed upgrade to DTE’s neglected distribution grid should not come at the expense of ratepayers. Michigan residents already pay the highest electric rates by far in the entire Midwest, for some of the worst performance. The new rate, effectively 20.4 cents per kilowatt hour, is 25 percent higher than the national average of 16.3 cents per kilowatt hour, as calculated by the U.S. Energy Information Agency (EIA). Yet DTE reliability remains far worse. In 2022, DTE’s self-reported SAIDI (System Average Interruption Duration Index, or how long the average customer went without power) was 584 minutes, or 75 percent higher than the national average.

DTE, not ratepayers, should bear the burden of fixing the grid. DTE has neglected infrastructure for decades, while shareholders have prospered. In 2022 DTE paid out $752 million in shareholder dividends, almost double the 2010 total, while CEO compensation also doubled over that span, to $11 million a year. DTE’s 2022 profits were nearly $1.1 billion. On December 8, DTE raised its shareholder dividend again.

Finally, while approving spending on the grid, the MPSC did not include any performance-based measures. DTE thus remains unaccountable for improving the actual experience of its customers.

Our system of state utility regulation is fundamentally flawed. Public power is the better option:

• The MPSC, an appointed board, makes decisions in private, under an exemption from the Open Meetings Act. A publicly owned utility would deliberate openly and make decisions democratically.
• As a monopoly, DTE has little internal incentive to place customer satisfaction over corporate profits.  Publicly owned utilities are directly accountable to ratepayers, not shareholders.
• DTE’s incentive structure ensures that MPSC efforts to protect consumers and residents (and address climate change), while making some impact, will always fall short of what’s needed. 
• DTE executive compensation is tied to stock performance, not the utility’s public interest obligations. A publicly owned utility would reward managers based on how well they serve the public interest, not shareholders.
• We estimate that DTE extracts $23 million in annual profits from Ann Arbor. A city-owned utility would reinvest these funds locally.

“Another outrageous DTE rate hike makes it crystal clear that Michigan’s current energy system is failing people and planet,” says Michelle Deatrick, Chair and Founder of the Washtenaw Environmental Council and chair of the DNC Climate Council. “With this eighth rate increase since 2010, DTE is burdening ratepayers already grappling with high rates for unreliable electricity. That burden disproportionately impacts Black, Brown, Indigenous and low-income communities. Public power offers a better path: toward a sustainable, just, green future.”

Ann Arbor for Public Power, a nonprofit grassroots citizen group, is at https://annarborpublicpower.org . 

Statements from Ann Arbor for Public Power Advisory Board Members

“The MPSC’s approval of another outrageous DTE rate spike makes it crystal clear that Michigan’s current energy system is failing people and planet. Instead of reducing outsize shareholder returns and executive salaries, with this eighth rate hike since 2010, DTE is burdening ratepayers already grappling with high rates for unreliable electricity. That burden will disproportionately impact Black, Brown, Indigenous and low-income communities. To make it worse, DTE is using Michiganders’ electricity payments – nearly half a million dollars already in 2023 –  to fund an army of lobbyists working to promote this rampant corporate greed. Public power offers a better path: toward a sustainable, just, green future.”

• Michelle Deatrick, Chair and Founder of Washtenaw County Environmental Council, Chair of DNC Climate Council and former Washtenaw County Commissioner.  

“The MPSC has long been an unmitigated series of disappointments. This decision coupled with their Line 5 ruling should dispel any remaining illusion of who the MPSC is really there for: the corporate fossil fuel industry. In fact they should rename themselves the “Michigan Corporate Service Commission” to more accurately reflect their body of work and ongoing legacy to the state. This is only the latest in a series of reminders that the fox is living in the henhouse and we must act to take our power back by forming a municipal utility.”

• Yousef Rabhi Washtenaw County Commissioner and former member of the Michigan House of Representatives and Democratic Floor Leader.

“Michigan is dealing with 2 issues.  The MPSC is just rubber stamping everything that goes past their desk without thought as to who is paying for their decisions or who is impacted.  The MPSC also passed the Enbridge tunnel proving they are not working for Michigan or in our best interest.. Why would they pass a $500 million project with a corporation that has been operating illegally for 3 YEARS and has sued the STATE OF MICHIGAN? The MPSC is not representing Michigan citizens or our Great state and they need to be immediately replaced by Governor Whitmer.  DTE is a greedy corporation that has found a weak and easy way to increase their profit. As DTE paid their shareholders $700million in profit last year, this last rate increase feels like Michigan citizens are paying for their shareholders. DTE did not invest in their failing infrastructure, they invested in shareholders.  Black, Brown & Indigenous people across the state are having to choose between energy and food to cover these costs.  We need to invest in public power and end this monopoly.”

-Andrea Pierce, Chair & Founder of Anishinaabek Caucus, MEJC Network Manager and Little Traverse Bay Bands of Odawa Indians citizen

“Michigan ratepayers are already subject to some of the most expensive, least reliable, and dirtiest electricity in the United States. While municipal power providers are delivering higher quality service for a lower price in nearby communities like Lansing or Chelsea, we are stuck with even higher prices due to yet another rate increase.”

  –  Jeff Irwin, State Senator. 15th District. 

“It is obscene to allow DTE to increase energy rates on working families while their shareholders rake in massive profits for providing some of the least reliable and most expensive energy in our region. Equally disturbing in this ruling is the approval for DTE to pass on millions of dollars in costs to ratepayers for memberships in groups that sponsor luxurious getaway conferences for utility commissioners, despite recommendations from MPSC staff to the contrary. DTE is the poster child for why we need municipal utilities that are accountable to ratepayers and voters, not corporate boardrooms and shareholders.” 

• Sean McBrearty, Michigan Director, Clean Water ActionFOR IMMEDIATE RELEASE: December 15, 2023