News Story

Michigan Electricity Rates Since 2003: 15 Increases, 1 Cut

Consumers Energy gets another rate hike

Consumers Energy electric utility was approved for a $65.8 million rate increase this week by the Michigan Public Service Commission, the state agency that regulates Michigan’s electric and natural gas monopolies.

In addition to allowing Consumers Energy to charge higher rates, the MPSC also approved the Jackson-based energy provider earning a 10 percent return on equity — that is, profit — on its operations. The commission denied the utility’s request to collect a profit of 10.5 percent.

This is the ninth time the commission has allowed the company to raise prices on consumers since 2005. The rate increases over that period total $912 million. Consumers Energy earned a profit of $616 million in 2016.

DTE Energy, the state’s largest electric utility, has imposed six rate increases since 2003, totaling $1.2 billion. During that time, DTE implemented one rate decrease worth $79 million.

In 2016, residential customers in Michigan paid the highest price, on average, for electricity in the Midwest, according to the federal bureau that tracks nationwide energy production and trends.

The Energy Information Administration reports that Michigan’s residential customers paid 15.26 cents per kilowatt-hour in January 2018, the most recent month for which data is available. Customers in Indiana and Ohio paid significantly less for a kilowatt-hour of electricity, at 11.09 cents and 11.82 cents, respectively. As of January 2018, Michigan has the 12th highest electricity costs among the 50 states and Washington D.C.

Consumers Energy’s residential customers are getting monthly rate increases averaging $1.87 above the amount last approved by the MPSC. Because the commission only approved about half the increase the utility had requested and began collecting last fall, customers who were already paying the higher amount will see their monthly bills fall. Michigan law used to allow utilities to raise rates without prior approval, but not any longer. But they get to keep that extra money only if the state approves the increase.

“The Michigan Public Service Commission approved a rate increase for Consumers Energy based on expenses and new infrastructure investments that the Commission believes are reasonable and prudent to maintain safe, reliable utility service,” said MPSC spokesman Nick Assendelft.

A spokesperson with Consumers Energy told Michigan Capitol Confidential in a statement that even with the rate increases, the average electricity rates for consumers is lower than the national average.

"Since 2000, electric general rate cases were required periodically to reflect the ongoing costs of investment in new infrastructure to address environmental compliance, new cleaner and more efficient generation (Zeeland and Jackson), system reliability and technology (SAP, smart meters and digital customer experience)," said Consumers Energy Spokeswoman Katie Carey.

Editor's note: This story was updated with a comment from Consumers Energy.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.