The battle against Michigan power outages yields little accountability (2024)

An ice storm last February left Nick Selewski without power for five days while recovering from hip surgery, making repairing his backup generator difficult.

Selewski, a DTE Energy customer in Redford Township, was one of the 700,000 Michiganders who lost power during the storm.

A year later, Selewski doesn’t think reliability has improved in Redford, where he said the power “seems to go off a lot.” He lost power again in January for over four hours during another winter storm.

“My opinion is they [DTE] have to update their system,” said Selewski, adding that better tree trimming could help reduce the outages that have plagued his neighborhood for years.

Utilities say they’re working to address reliability by increasing tree trimming and upgrading infrastructure. But advocates say new laws and policies are needed to hold utilities accountable and protect ratepayers and, despite calls for accountability from lawmakers following the ice storm, little has happened.

And some lawmakers and advocates say that the millions of dollars utilities spend to influence the political process make it difficult to advance legislation to protect ratepayers. Several who spoke with Planet Detroit said Michigan’s recently passed clean energy legislation was notable for including few consumer protections like outage credits or penalties for utilities that fail to meet reliability standards.

A recent report highlighted Michigan’s long-term reliability problems, finding it was the second worst state for power outages between 2000 and 2021. Another report found that Michigan was the fourth worst state for restoration time following an outage in 2021, with DTE taking the longest to restore power among Michigan’s investor-owned utilities.

In 2022, DTE and Consumers Energy showed modest improvement in reliability compared to 2021, but the average customer was without power for roughly 10 hours and 8 hours, respectively. This was well above the national average of five and a half hours.

What’s standing in the way of accountability for power outages?

Michigan Attorney General Dana Nessel criticized Consumers’ most recent long-term distribution plan, which details investments in the grid, in Feb. 16 comments made to the Michigan Public Service Commission.

“Consumers Energy failed to articulate the degree of customer burden for their spending, does not focus enough on reliability improvements, and includes no accountability measures should they fail in their commitments,” she said.

At a Feb. 22 meeting for the “Taking Back Our Power” coalition, which supports legislation to rein in utilities’ political spending, House Majority Floor Leader Abraham Aiyash (D-Hamtramck) suggested that efforts to improve reliability and add consumer protections to the renewable energy package have been undermined by utilities, which have spent heavily against candidates opposed to their interests.

Aiyash said that utilities were “the elephant in the room” during negotiations over the bill package and that legislators worked with the understanding that utilities “have to at least be neutral on the passage of bills in order to move them across the finish line.“

State regulators consider incentives while advocates push for power outage credits

In the past year, one of the more significant gestures toward accountability has been a proposal from the MPSC to create financial incentives and disincentives for utilities based on reliability, potentially collecting $10 from ratepayers to create a fund for the program.

However, the proposal prompted further outrage. Cities, ratepayer advocates, and business groups have criticized it, arguing it would reward utilities for service that would still not meet Michigan’s reliability standards.

Amy Bandyk, executive director of the Citizens Utility Board of Michigan, said basic utility functions like reliability shouldn’t be eligible for incentives, only penalties.

In a previous statement, CUB and other groups said such benefits were “misaligned with customer interests.” They would come on top of the utilities’ 9.9% return on equity, higher than most electric utilities.

The groups also argued that larger penalties were needed to reflect the true cost of outages and motivate utilities to improve reliability. They said the funds from these penalties should go to the most impacted ratepayers.

“It was a little upsetting to hear that we’re even entering into a conversation about incentives when the idea of compensation for impacted ratepayers is constantly being knocked down and not even being considered for discussion,” Rafael Mojica, program director for the energy justice nonprofit Soulardarity, said at a Feb. 12 meeting of the MPSC Financial Incentives/Disincentives Work Group.

In a statement to Planet Detroit, DTE said that the MPSC’s proposal would more likely result in penalties for Michigan utilities than rewards.

The MPSC made modest changes to outage credits last year, increasing them from $25 to $35 for each day customers are without power and making them automatic. But it takes four days for the credits to kick in during “catastrophic” conditions, when more than 10% of customers are without power, with outages applied after shorter periods under other conditions.

Roshan Krishnan, a Michigan Environmental Justice Coalition policy associate, called the rules governing these credits “byzantine.”

“The duration limits are such that you have to be an extreme outlier in order to receive the credits,” he said.

The group has pushed for higher credits like those included in bills introduced in 2022, which would have created a $5 hourly credit that increased with the duration of the outage, prohibited utilities from recovering the cost of credits, and created a $100 credit for customers experiencing four outages in a year and $200 for more than four. Those bills did not progress and have not been reintroduced.

CUB previously pushed for a $2 per hour outage credit, which Bandyk said would align with the losses customers experience. However, those forced to replace food in their freezers or pay for hotels may be paying much more. The MPSC said CUB’s request was “not reasonable.”

Some legislation to protect ratepayers was introduced last year, including HB 5221, to limit utility charges for restoring service to $25, and HB 5216, to create incentives and penalties for utilities based on safety, reliability and environmental impact.

The bill also included language about moving the state away from frequent rate hike requests.

DTE signaled in early February that it would ask for another rate increase this spring, just months after securing a $368 million rate increase that added $6.51 to the average bill.

Bandyk said HB 5216 could limit the “revolving door rate increases” that “enrich utilities while continually squeezing customers.”

Rep calls political spending a ‘conflict of interest’

Rep. Dylan Wegela (D-Garden City) said utility spending on politics is at the heart of Michigan’s ongoing reliability problems, calling the present system “a major conflict of interest.”

“The regulators of the utilities are being influenced by the companies pretty severely,” he said.

According to the most recent data from the watchdog group Energy and Policy Institute, 120 of 148 Michigan state lawmakers took money from political action committees affiliated with DTE, Consumers, or both in 2023. These PACs sent a total of $329,750 to Democrats and $235,2000 to Republicans.

These donations often arrived as lawmakers were demanding accountability. For example, Rep. Helena Scott (D-Detroit) received $3,000 from DTE’s PAC while leading a statewide listening tour for the newly created Michigan House Energy Reliability, Resilience, and Accountability Task Force. Other lawmakers received far more, like House Speaker Joe Tate (D-Detroit), who took in $32,500. Neither Scott nor Tate responded to a request for comment.

DTE has also donated to dark money nonprofits involved in political causes, including a $100,000 donation in 2020 to a group opposed to Michigan COVID restrictions.

Wegela introduced two bills last week, HB 5520 and HB 5521, to ban dark money contributions to PACs and political campaigns and block any political nonprofit or PAC tied to an electric or natural gas company from doing so.

“It is cheaper for them to spend money on influencing us in Lansing than it is for them to actually update the grid,” Wegela said at the Feb. 22 Taking Back Our Power meeting. “They only have to spend a few million dollars to get a return on that investment…in the billions.”

DTE defended its political spending in a statement to Planet Detroit.

“We owe it to our customers and employees to support candidates for public office that help us meet our purpose of providing safe, reliable, affordable and clean energy for the 3 million plus residents and businesses we serve every day,” the company said.

DTE also said it would invest $9 billion over the next five years in its “four-point plan,” which includes tree-trimming, rebuilding older portions of the grid, updating infrastructure and installing smart grid technology.

‘It’s not a coincidence that DTE spends a lot of money on Michigan politics’

On a Feb. 8 earnings call, DTE Chairman and CEO Jerry Norcia said circuits that received upgrades in the first half of 2023, experienced 33% fewer outages in the second half of the year compared to the second half of 2022.

Consumers Energy spokesperson Brian Wheeler said shareholders, not customers, paid for the company’s political spending.

He added that the company was working on its “Reliability Roadmap,” which includes tree-trimming, upgrading grid infrastructure, installing smart technology, and burying some sections of power lines. He said that in 2023, 9 in 10 customers who lost power had it restored in 24 hours.

Bandyk challenged Wheeler. “The revenue all comes from customers,” she said, adding that the company’s return on investment is excessive from CUB’s point of view.

Karlee Weinmann, research and communications manager for the watchdog group Energy and Policy Institute, questioned if there was the political will to advance legislation to protect ratepayers.

“It’s not a coincidence that DTE spends a lot of money on Michigan politics,” she said, “and then we end up with policy outcomes that are criticized as overly deferential to utilities.”