Nearly 1.8 million Consumers Energy customers in Michigan could face higher power bills as the utility seeks a $456 million annual increase. The utility company submitted the filing on Tuesday.
This request, filed on the first day it is legally allowed, comes less than three months after the utility received approval for a $217 million rate increase request submitted last year.
Attorney General Dana Nessel has already pledged to intervene in the case, which will be decided by the three-person Michigan Public Service Commission. Intervention is a formal legal process where individuals or groups are granted official "party" status in the regulatory proceeding.
In a statement, Nessel said the constant rate increases are unsustainable.
“Consumers Energy and DTE keep demanding more and more money, the MPSC continues to reward their incessant demands, and the cycle of constant, growing rate hikes are pushing Michigan families and businesses to the brink,” Nessel said.
It is not just an increase in rates Consumers is after. The utility is also asking for an 0.35% increase in return on equity — the rate of profit the company is allowed to return to shareholders. Consumers’ rate has been 9.9 percent since 2020, but would rise to 10.25% if the filing is approved.
Consumers said if the application goes through, a home with a monthly electric bill of $155 would see a $13 increase each month.
Matt Johnson, a Consumers media relations specialist, said the funds would be used to fund the company’s Reliability Action Plan, which includes clearing trees from power lines, burying lines underground, and integrating technology to better anticipate outages.
“We are committed to using those customer dollars wisely, and we have done some really important research this year to figure out what the best way to use those dollars is,” Johnson said. “We can let our customers know emphatically that 75 cents of every dollar goes directly back into securing our electric grid.”
Last year, state regulators ordered the company to make improvements after an independent audit found that DTE and Consumers Energy were consistently underperforming compared to industry peers on metrics like power outage lengths and tree trimming schedules
David Stevenson is the director of energy and environmental policy at the Mackinac Center for Public Policy, a free market think tank. He said there’s “a lot of misunderstanding” about rate increase requests.
“We have a fairly old system, so we've got to replace a lot of things and upgrade a lot of things so that we will meet the average for the U.S.,” Stevenson said. “We’re simply seeing the cost reaction of the state mandate.”
Stevenson said utilities tend to get approved for rate increases that are 30 or 40% less than their initial requests. Consumers’ last request was whittled down to $277 million from an initial ask of $436 million.
Matt Bandyk is a senior consultant with Five Lakes Energy. He provides expert witness testimony in electric and gas rate cases that the Citizens Utility Board of Michigan, a nonpartisan consumer advocacy organization, intervenes in. Bandyk said customers shouldn't bear the financial burden of improvements to the system.
“We're concerned that Consumers Energy has a lot of work to do to improve reliability, but a lot of the need to do that work is due to their own fault,” Bandyk said. “It's due to their own neglect of the distribution grid over the course of years, and now the costs of upgrading the grid and getting it into a modern state are falling onto customers.”
