Many Michiganders are concerned about the cost of their electricity bills and worried those rates will continue to go up as we head into a new year.
The Detroit News recently analyzed Michigan electricity rates over the past 20 years and found the state outpaces most others with little hope of slowing down.
"You're talking about an increase of somewhere around 120% if you're a customer of DTE, if you're a customer of Consumers Energy, and based around averages for the entire state of Michigan," reporter Craig Mauger explained.
Michigan law allows utilities to to apply for rate increases 12 months after their last application allow for what Mauger describes as a "revolving door of rate hikes."
Utilities justify those requests to fund updates to the grid and increase reliability as Michigan's population stagnates, mean fewer people are responsible for the total cost of energy in the state.
It's also unclear yet whether the development of new data centers could impact residential customers' bills.
"In Michigan, you have regulators saying that they have put safeguards in place to ensure that data centers will not only not increase residential customers' rates, that they might actually decrease them," Mauger said.
"The utilities will argue, hey, if we bring in a big customer, like a data center, we're going to spread the rates and the cost over more people, so maybe your rates will go down."
Now as Michigan enters a big election year, energy and the price of electricity have become a major campaign issue.
"You have Secretary of State Jocelyn Benson on one side saying, we need a moratorium or a freeze on rate increases for a period of months before we figured out what we're going to do going forward. You have some Republicans saying, hey, we need to open this up to energy choice," Mauger said.
Mauger says he expects utility regulation and the cost of electricity to continue to be a political hot topic into the November election.
Interview Highlights
On how much Michiganders' energy bills are going up
The rate of increase is much higher than the majority of other states. We found there were only three states that had percentage increases that were larger than Michigan's over the last two decades. ... 20 years ago, people were paying about nine cents per kilowatt hour. And from the data that we've obtained from a bunch of sources, we've cross checked this with a variety of sources, they're now paying around 20-21 cents per kilowatt hour. You're talking about an increase of somewhere around 120% if you're a customer of DTE, if you're a customer of Consumers Energy, and based around averages for the entire state of Michigan.
On how often rate increases are happening
Under Michigan law, and we have seen this playing out in recent years to greater extent than before, the utilities are able to pursue a new rate increase basically one year after their last rate increase was applied for. So, you've got a situation now where you have one rate increase proposal happen, play out and then almost immediately, the utilities are going forward and putting a new rate increase proposal in, and they say this is because of their desire and the push to increase reliability. There was so much attention paid to outages across the state. We've had a number of lengthy outages. The Lansing area has had some of these, of course, and there's a pursuit of trying to decrease outages, make our grid more reliable, and all this added rate revenue is needed to invest in the grid, according to the companies.
On energy becoming a political issue
I've covered a bunch of gubernatorial races, energy has never really been one of the core issues in a gubernatorial race before. At least in recent times, I should say, I mean, we're in a kind of new era where now all the candidates are talking about this. The wide majority of them have a plan for what they want to do. You have Secretary of State Jocelyn Benson on one side saying, we need a moratorium or a freeze on rate increases for a period of months before we figured out what we're going to do going forward. You have some Republicans saying, hey, we need to open this up to energy choice.
Interview Transcript
Sophia Saliby: Many Michiganders are concerned about the cost of their electricity bills and worried those rates will continue to go up as we head into a new year.
The Detroit News recently analyzed Michigan electricity rates over the past 20 years and found the state outpaces most others with little hope of slowing down.
Craig Mauger is the reporter behind that story. He joins me now. Thanks for being here.
Craig Mauger: Hey, thank you for having me.
Saliby: You found the price of electricity for residential customers in Michigan has more than doubled in the past two decades. How does that compare to other states?
Mauger: I mean, the rate of increase is much higher than the majority of other states. We found there were only three states that had percentage increases that were larger than Michigan's over the last two decades. For customers out there, for people who are listening, how much is this? What does this look like?
Well, 20 years ago, people were paying about nine cents per kilowatt hour. And from the data that we've obtained from a bunch of sources, we've cross checked this with a variety of sources, they're now paying around 20-21 cents per kilowatt hour. You're talking about an increase of somewhere around 120% if you're a customer of DTE, if you're a customer of Consumers Energy, and based around averages for the entire state of Michigan.
Saliby: You describe this "revolving door of rate hikes" as utilities are allowed to request them every 12 months. Is that typical nationwide?
Mauger: From what we have heard from consumer advocates, that is not typical, but there are many states where the pursuit of rate increases has to be more spaced out. For people to understand kind of how this works, Michigan has a three member panel that's appointed by the governor, the Michigan Public Service Commission, that gets to decide whether utilities' rate increases are just and warranted, just and reasonable or not. So, if DTE wants to increase rates, they have to go through a lengthy process with the Public Service Commission to decide what the rate increase will actually be.
Under Michigan law, and we have seen this playing out in recent years to greater extent than before, the utilities are able to pursue a new rate increase basically one year after their last rate increase was applied for. So, you've got a situation now where you have one rate increase proposal happen, play out and then almost immediately, the utilities are going forward and putting a new rate increase proposal in, and they say this is because of their desire and the push to increase reliability. There was so much attention paid to outages across the state. We've had a number of lengthy outages. The Lansing area has had some of these, of course, and there's a pursuit of trying to decrease outages, make our grid more reliable, and all this added rate revenue is needed to invest in the grid, according to the companies.
And there are also changes in how energy is being produced, what the sources of the energy are, where they're coming from, building new transmission lines. There are projects going on all over. I just got a notice for one in my area of a hearing coming up. So, all of these renovations come with the cost, and that cost is borne by the ratepayers, us.
Saliby: There's a lot of concern that data center developments will push residential bills up. Is that going to happen? Is that something that people should be worried about, or is it kind of unfounded when it comes to Michigan policies?
Mauger: You know, it's really hard to say because we're kind of at the cutting edge of this. In other states, there is some evidence that the data center developments in those states have pushed up energy bills. West Virginia is one of them. If listeners are listening, and they want to look up and read more about this, look up what's happened with West Virginia's rates.
In Michigan, you have regulators saying that they have put safeguards in place to ensure that data centers will not only not increase residential customers' rates, that they might actually decrease them, because that's one of the fascinating dynamics here. Michigan's energy rates are increasing at a faster percentage than other states, for one of the reasons being, our population has been relatively stagnant. And when you don't grow your population, when you don't have new manufacturers coming in and opening large plants that consume a lot of energy, the base of the rates, all of these modernization efforts that are happening with the grid get spread over fewer people. So, that means the individuals who are still there, their rates go up.
The utilities will argue, hey, if we bring in a big customer, like a data center, we're going to spread the rates and the cost over more people, so maybe your rates will go down. Regardless of all of that, this is one of the reasons we are looking into this, this subject of electricity and energy is becoming a massive political issue at the start of this election year. And the data centers debate, which has really fascinated so many people, got so many people interested, is going to get everyone more focused on energy. And now you have candidates trying to figure out and lay out what their proposals are for how to deal with all this.
Saliby: That was the question I wanted to end with. You talked to gubernatorial candidates about what they would do about rising costs of electricity if elected. What are some of the policies they're proposing?
Mauger: Yeah, they're all over the map. And it's interesting to me, because I've been covering Michigan politics for over a decade, and I've covered a bunch of gubernatorial races, energy has never really been one of the core issues in a gubernatorial race before. At least in recent times, I should say, I mean, we're in a kind of new era where now all the candidates are talking about this. The wide majority of them have a plan for what they want to do.
You have Secretary of State Jocelyn Benson on one side saying, we need a moratorium or a freeze on rate increases for a period of months before we figured out what we're going to do going forward. You have some Republicans saying, hey, we need to open this up to energy choice. Right now, there are caps on the amount of energy mission customers can get from alternative suppliers, other than the monopoly utilities in areas. Should the state revisit its renewable energy law that Governor Whitmer put in place in 2023? These are all debates that voters are going to be hearing about over the next ten months.
Saliby: Craig Mauger is a reporter for The Detroit News. Thank you for joining us.
Mauger: Thank you for having me.
Consumers Energy is a financial supporter of WKAR.
This conversation has been edited for clarity and conciseness.
