Hike coming in surcharge on monthly utility bills

Michigan electricity customers can expect a $1.50 per-meter charge on their monthly bills in September, thanks to a recent decision by state utility regulators.

The Michigan Public Service Commission announced in an April 17 press release that its members had voted to increase the funding factor, a charge it applies to all electric customers in the state. The announcement comes on the heels of a March 27 decision that granted Consumers Energy its sixth rate increase in six years.

The funding factor supports the Michigan Low-Income Energy Assistance Program, through which most electric customers subsidize customers who cannot afford to pay their bills. Regulators project that the state-required fee will generate about $90 million each year.

In 2024, about 50,000 households drew on the fund. Regulators expect that number to increase to 90,000 by September 2026, and a commission official says the hike in the funding factor will help those customers.

“Ultimately many more Michigan households now will receive energy assistance and self-sufficiency services, as was intended with the law’s passage,” Matt Helms, spokesperson for the Michigan Public Service Commission, told CapCon in an email.

State law requires regulators to balance the interests of the utility and ratepayers, Helms said, by taking into consideration the revenue utilities need to cover reasonable and prudent costs of providing service. Those costs include a reasonable return for investors, and regulators must set rates that let the regulated regional utility monopolies recover their costs.

“Utilities cannot raise rates without MPSC approval, but the commission has continued to authorize revenue increases tied to infrastructure and other costs,” said Helms.

A Republican lawmaker counters that soaring energy costs result from energy mandates that place ideology above affordability.

“When energy mandates drive rates up, working families get squeezed twice — once on their own bill, and again when the MPSC forces them to subsidize their neighbors who can't pay,” Rep. Pauline Wendzel of Watervliet, chair of the House Energy Committee, said in an email to Michigan Capitol Confidential. “You can’t mandate your way to cheap, reliable energy, and Michiganders are living with the proof every time they open their utility bill.”

Wendzel said the state should address the root cause of rising electric rates by adopting Project Lighthouse, a Republican proposal for changing the state’s energy policy.

If Michigan wants to provide assistance with energy costs, one energy expert said, it should use state tax dollars to support the program instead of raising the funding factor charge.

“Rather than shift costs to other electric customers, some of whom are not much better off financially than the people who are to be helped by this, the state should have the guts to raise taxes instead,” Dave Stevenson, director of energy and environmental policy at the Mackinac Center for Public Policy, told CapCon.

Raising taxes would take legislative action, Stevenson added, which would bring more attention to the impact on energy bills of state policies such as wind and solar mandates.

Rep. Sean McCann, D-Kalamazoo, chair of the Senate Energy and Environment Committee, did not respond to a request for comment.

Until a 2024 change in state law, the funding factor charge was capped at $1 per meter. The amended law allows the fee to increase incrementally each year until it reaches $2 per line, at which point it will automatically increase in response to inflation. While the assistance program once had a spending cap of $50 million per year, the 2024 change removes that cap.

Michigan’s two largest utilities, Consumers Energy and DTE Energy, have reported increased profits over the past five years.

DTE Energy reported net income of about $1.46 billion in 2025, according to macrotrends, up from roughly $900 million in 2021. CMS Energy, the parent company of Consumers Energy, reported net income of about $1.06 billion in 2025, according to macrotrends, up from roughly $830 million in 2021.