Originally published by Planet Detroit and produced in partnership with Outlier Media. This guide was created as part of the American Press Institute’s Ideas to Action initiative to support accountability reporting that better prioritizes the needs of local communities.
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Over the last decade, electric bills in southeast Michigan have jumped while power outages have become more of a problem. Between 2015-2020, DTE Electric’s rate increases totaled $962 million, which has translated into an approximately $18 increase on the average residential customers’ July bill. Meanwhile, federal data shows that DTE takes longer to restore power than most other utilities around the country.
Residents here now pay some of the highest rates in the nation, leaving many Michiganders to wonder “Why?” and “What can I do about it?”
Who is responsible for my electric utility service?
Most Metro Detroiters receives their electricity from DTE Energy, which is a “legal monopoly,” meaning it enjoys protection from competition under state law. However, its rates and other business plans must be approved by the state government. The Michigan Public Services Commission is the agency that regulates utilities, and it’s run by officials who are appointed by the governor.
DTE is a private, “investor-owned” utility, meaning it is publicly traded on the stock market and partially raises money for large projects from shareholders, who in return for their investment receive part of the company’s profits.
Help me understand my utility bill
And here’s a bill we annotated that points out some interesting tidbits about your bill that you might not have known before.
Why are my utility bills so high?
One factor driving DTE’s high bills is the company’s business model, which requires customers to pay extra so its Wall Street investors can make a profit. To understand why DTE uses this business model, it helps to go back to the early 1900s when the nation was beginning to electrify. At the time, municipalities were generally served by a publicly owned utility run by the local government. But as electricity demands increased and the country’s electric grid quickly expanded, southeast Michigan needed more large, centralized plants to generate power. Building plants, transmission lines and other infrastructure is too expensive for local governments, so many municipalities turned their systems over to an early version of DTE that was called Detroit Edison.
Detroit Edison was able to quickly raise money from Wall Street investors to fund the big projects, but that came at a cost to customers. Because the state guarantees the utility a return on its investment or equity, significant expenses are tacked on to customers’ power bills. Federal data shows that customers served by private utilities like DTE on average pay about 12% more than those served by publicly-owned utilities, which don’t have investors. In 2018, DTE Electric customers collectively paid an additional $650 million to satisfy the company’s investor obligations. That added about an additional $13 on the average electric users’ monthly bill, or about $156 annually.
Despite the extra cost, the business model has made sense for most of the last century as customers needed those big-ticket projects to continue to get consistent electricity. But the model contributes to the increasing costs and poor service metro Detroit electricity customers face today.
Factors driving up your DTE Energy bill:
DTE’s first priority as an investor-owned utility is to make money for its shareholders, not to save customers money, or provide the best service possible. Here are some of the reasons (beyond the statutorily guaranteed return on investment) of those expensive utility bills.
TAXES AND RATES: DTE pays higher taxes and faces higher borrowing rates than publicly owned utilities, and those costs are passed on to customers. While people in other states can purchase power from different companies that must compete with each other for customers with lower rates, metro Detroiters must, for the most part, buy their electricity from DTE under its legal monopoly statute.
COSTS OF DEFERRED MAINTENANCE: The company’s rates are also climbing because over the last several decades it fell behind on replacing aging equipment and trimming trees near its power lines. Those two issues are partly responsible for the long and high number of outages in DTE’s service area, and the company is spending heavily to catch up on its backlogs. Those costs are passed on to customers – DTE’s rates jumped higher than all but one utility nationally between 2015 and 2019, and increases have continued since.
INVESTMENT DECISIONS THAT PRIORITIZE PROFIT: Shareholders make the most money off of large, expensive projects, like the new $2 billion gas plant that DTE is building near Port Huron. Customers are paying for this project even though consumer advocates have argued that the gas plant is likely not in customers’ best financial interest, will contribute significantly to the region’s pollution, and they say a strong case can be made that the company should instead invest in renewable energy that’ll likely be cheaper in the long run because the cost of renewable energy continues to quickly drop. However, DTE in part wants to build the gas plant because investors will make more money – because the state guarantees DTE’s investors an approximately 10% return on equity, the investors earn a larger return off of larger investments. The company also claims it needs the plant to provide uninterrupted service.
HIGHER COST BURDEN ON RESIDENTIAL CUSTOMERS: Around ten years ago, the MPSC allowed DTE to shift more of the electric grid’s costs from industrial customers to residential customers. While residential rates have jumped over the last ten years, the rates for industrial customers, like Ford or other large companies, have largely remained the same.
The sum of these issues is what’s behind DTE’s high rates for residential customers, and they’re especially hard on low-income residents. Every residential customer pays the same amount regardless of their finances, so people in low-income, majority Black and brown communities like Highland Park, where the median income is $13,000, pay over 30% of their income on energy bills. By contrast, non-low-income customers spend about 3% of their income on energy bills, and industrial customers pay a fraction of that. This creates a “utility burden” on low-income customers. Detroit had the third-highest utility burden for low-income and otherwise vulnerable customers in a 2020 analysis of 25 cities.
What about purchasing clean energy?
If a customer wants to purchase clean energy, then they’re going to have to pay even more. About 15% of DTE’s power comes from renewables, but customers can purchase a higher amount than that through DTE’s Voluntary Green Pricing, even though energy from renewable sources is cheaper than coal to produce throughout most of the day. But DTE still has gas and coal plants that it has to pay off, so customers are forced to pay for both the fossil-fuel plants and the new solar and wind systems when they want to buy clean energy.
A bill being considered in the legislature would allow for “community solar” in which nonprofit or for-profit companies could set up small renewable energy developments that serve a small number of people. Customers who subscribe to the developments would receive a credit applied to their DTE bill. That would likely lower costs for those customers, and non-profits could cover bills for low=income residents. The “community” portion comes in because the community (or a company other than DTE) owns the solar panels, wind turbines, or other sources of clean energy generation. Supporters say it would ease the cost burden on low-income customers.
Utilities like DTE oppose that plan. A new program that DTE calls “community solar” and is part of VGP will allow low-income residents in Highland Park, Detroit and River Rouge to purchase clean energy from small solar installations and receive $25-$30 credit each month to do so. Though DTE has touted it as an example of it assisting low-income customers and its commitment to clean energy, the program is funded by donations from wealthier customers and philanthropic organizations – DTE will shoulder very little of the cost. Critics say it is not truly “community solar” because the utility, not the community, owns the solar panels and wind turbines.
How can I lower my bill?
Unfortunately, there aren’t many easy, safe, or effective ways to reduce your energy bills. Here are a few:
USE LESS ENERGY: Some customers turn down the heat or switch off air conditioners during cold and hot weather, but advocates advise against that because doing so can be dangerous. Moreover, the impact to your bill may be limited; since DTE customers pay a high amount of fixed charges each month no matter how much electricity they use, measures like keeping the lights out, turning down the heat, or using energy-efficient bulbs can only do so much to lower costs.
INVEST IN ENERGY EFFICIENCY: DTE also offers rebates of up to $500 for customers who invest in new energy-efficient windows, air conditioners, washers/dryers, refrigerators and other appliances, and energy saving measures like weatherization. Such programs benefit all customers because the cost of efficiency is less than the cost of energy, but the program is more useful to higher-income customers who can afford the upfront cost of buying appliances or investing in weatherization. Similarly, federal tax credits are available to those who can afford to invest in energy efficiency, but are generally of no use to low-income customers who do not pay income tax.
Can I get help paying my bill when I can’t afford it?
For those struggling to pay their bills, the state, federal government and DTE Energy have several programs available. Some, like Covide Emergency Rental Assistance, provide direct assistance that lowers costs, but it can take months for an application to be approved. Critics say most assistance simply spreads a customers’ debt across more payments instead of reducing costs. They’re calling on the state to allow low-income residents to pay a percentage of their income that they can afford, and have the state or welfare organizations cover the remaining balance.
Consumer advocates say many people don’t know assistance programs are available or which programs they qualify for, and applying for them can be difficult. Some programs require tax returns, which many low-income residents don’t have. When power is shut off, DTE typically charges a reconnect fee and a deposit that can total hundreds of dollars, depending on the amount of debt, which only adds to customers’ debt.
Among the most effective measures is the Low Income Self Sufficiency program was developed by former DTE CEO Gerry Norcia and the Michigan Welfare Rights Organization (MRWO) around ten years ago. It spreads low income customers’ high payments across the year, allows customers to negotiate payments with DTE and offers some credits on debt. MWRO provides direct cash assistance when customers fall behind.
The program once served tens of thousands of low-income customers and had a success rate of 97%, according to MWRO, but the Snyder administration asked DTE to allow the state’s health department to take over the program. The state then implemented a more difficult application process and imposed restrictions on who qualifies for the program, according to MRWO. The organization is currently asking the Whitmer administration to relinquish control of the program. MWRO and Soulardarity are among the only nonprofit groups that provide direct assistance to individual low-income customers.
Here is a link to current assistance programs on DTE Energy’s website.
Why does my power keep going out?
DTE and Michigan electric customers face a higher-than-average number of outages compared to other utilities around the country, and on average it takes DTE longer than most other utilities to restore power.
Experts say the issue is even worse in Detroit and older suburbs, a claim DTE has disputed, though it hasn’t provided data to back it up.
Advocates say evidence suggests that parts of DTE’s grid in newer, whiter areas perform better than those in lower-income areas where a majority of people of color live. That’s partly because utilities generally replace equipment in areas where there’s high or increased electric demand. As people left Detroit and its population shrunk, the company invested less in the city and more in the newer, wealthier suburbs.
Several major factors contribute to the high number of outages DTE customers face:
TREES: The high number of trees near wires and old equipment is especially a problem as the climate changes and strong storms in southeast Michigan become more frequent. DTE is responsible for trimming the branches, but, until recently, it only cut those within a few feet of its wires every nine years. Most utilities around the country cut branches every three to five years, and trim all trees that threaten their lines instead of only those that are a few feet away.
DTE is aiming to solve the issues with a massive “tree trimming surge” in which it plans to cut back branches across its service territory during the next five years. It’s also updating some of its aging equipment, but consumer advocates say those are short-term solutions.
AGING INFRASTRUCTURE: Meanwhile, DTE has been slow to replace aging equipment in its grid, and that makes it more likely to break when stressed during a storm. For example, old poles that grow brittle can more easily break during high winds, and experts say DTE has patched wires that break instead of replacing them, which leaves them weakened and more likely to snap in future storms. DTE is in the midst of a multi-year effort to update some of that aging equipment.
ABOVE-GROUND WIRES: A 1974 state law that required new distribution lines in new developments to be placed underground, which means wires in newer suburbs are often protected from the weather. Consumer advocates are calling for wires to be placed underground across DTE’s service territory, which would protect Detroiters from losing power during storms. DTE has said putting wires underground is too expensive.
How can the power grid be made more resilient to storms?
Many of the most obvious solutions for increasing the reliability of our electric system relate to reducing consumers’ dependence on DTE Energy. Needless to say, the company opposes measures that may cut into their sales revenue and profits.
MICROGRIDS & DISTRIBUTED GENERATION: Consumer advocates are pushing for the implementation of microgrids powered by locally owned distributed energy resources, which may include solar panels, wind turbines, combined heat & power, generators, and other small-scale power generation assets. Microgrids can interact with DTE’s grid but also operate as an island, powering entire neighborhoods or municipalities, and are more resilient because they reduce the number of people impacted during a grid failure. Microgrids are currently not widespread in Michigan, however, they are being piloted and studied by the MPSC and Consumers Energy as part of a larger effort to upgrade the state’s power grid.
DTE generally opposes these measures because the company and its investors make the most money off of building large central plants powered by gas, and by having a monopoly on electricity generation. DTE also recently purchased a gas pipeline in Louisiana and has invested in other gas infrastructure, so it makes more money if the grid is powered by gas that uses its equipment. If everyone in the state started getting their power from small scale sources that DTE didn’t own, the company would lose a lot of money, even though customers would likely save money and have more reliable power.
MUNICIPAL UTILITIES: Another solution is for municipalities to cut ties with DTE. City leaders in Ann Arbor are considering establishing some version of a publicly owned utility, which would give local residents and officials more control over their energy system. Other communities are discussing “community choice aggregation” in which a municipality purchases power from a company other than DTE at a lower rate. However, state law limits such arrangements.
I lost power for hours or days, now what?
In the meantime, residents continue losing power, which isn’t just an inconvenience – it’s dangerous and costly. Food goes bad, lives are disrupted and consumer advocates have begun pushing for utilities to compensate customers when they lose power.
DTE offers a $25 credit to customers who have experienced an outage of more than 120 hours under “catastrophic conditions,” a power outage of more than 16 hours under “non-catastrophic conditions,” or eight or more outages within 12 months. Following intense political pressure, the company in August “voluntarily” issued one-time $100 credits to residents who went days without electricity. But advocates say most people don’t know that the credit is available, and it is difficult for some low income residents who don’t have Internet access to apply for it.
Groups like Soulardarity and the Citizens Utility Board of Michigan are pushing the state to order DTE to automatically compensate customers who lose power at a rate of $2 per hour, but the MPSC has so far resisted any increase in compensation.
What can I do to improve my electric utility?
HOLD UTILITY PROVIDERS ACCOUNTABLE: The utility industry is highly complex, and the people who make decisions are protected from voters and customers, which makes it difficult to hold DTE and regulators accountable for high bills and poor performance. In short, customers and residents can’t vote out DTE’s executives for failures, and they also can’t vote out leadership at the MPSC, which sets rules that DTE must follow and is responsible for approving its rate increases and other business plans. The leadership at the MPSC is appointed by the governor, which insulates it from the mounting frustration with DTE and other utilities.
Understanding that arrangement and the points where residents and customers can apply pressure is key to effecting change. The MPSC holds public hearings at which residents and customers can weigh in on DTE’s proposed rate hikes, plans to build new power plants and other business plans. You can view the public meeting calendar here and view cases and subscribe to email alerts in MPSC’s docket here, where you can also submit comments.
The MPSC can’t order measures that aren’t allowed under state law. Many of the structural changes that consumer advocates are demanding would require changes to the law, and the Michigan Legislature in recent decades has rarely passed new laws that DTE opposes. That’s partly because of the company’s influence – few entities, if any, have spread as much money among Michigan lawmakers as DTE.
HOLD LOCAL LEADERS ACCOUNTABLE: The company also uses its charitable arm, the DTE Energy Foundation, to effectively put community leaders on its payroll. For example,Rev. Horace Sheffield in Detroit receives financial support from DTE’s foundation, sometimes testifies before regulators in favor of the company, or promotes the company on social media and in other venues. Such leaders generally don’t disclose that they receive money from DTE. But if a community leader is speaking favorably of DTE, there’s a good chance that they’re quietly taking money from the company, advocates say.
SUPPORT ADVOCACY GROUPS: Volunteering with or joining groups that get involved with the regulatory fights on behalf of residential consumers’ interests is one way to help. A growing number of nonprofits are taking on DTE in the regulatory process, shedding light on community leaders on the take, proposing other solutions to the problems, pressuring policymakers and/or offering assistance to those who are struggling. Among them are Citizens Utility Board (CUB), Soulardarity, Sierra Club, and Michigan Environmental Justice Coalition, and each is in need of financial support and volunteers.
What is the future for my electric utility?
As the climate changes and storms in southeast Michigan grow stronger and more frequent, the weaknesses in DTE’s grid and business model lead to more outages and higher rates. The company has been and will likely continue to be slow to react and resist changes because its primary function is to make money for its shareholders, not provide the best possible service at the lowest possible price to customers, according to advocates who add that DTE isn’t prepared for the effects of climate change, and its failures will continue to disproportionately hit lower-income residents, especially in majority Black and brown areas in Detroit and older suburbs.
The utility industry is quickly changing as the transition to renewables picks up steam. While some companies around the country are adapting and moving with urgency, DTE has in many ways resisted a meaningful shift to renewables. That’s partly because it invested heavily in gas infrastructure, and will make more money if its service area is powered by gas. And while DTE has built several solar and wind farms, it has successfully lobbied for laws and policies that limit access to rooftop solar and community renewable programs and projects that will improve reliability and lower bills, but cut into the company’s profits. Put simply, DTE wants to own the sources of power generation because it makes money off of it, even if it’s cheaper for residents to generate their own power.
As part of its campaign against renewables, DTE has repeatedly asserted that it can’t build out more renewables because “the sun doesn’t always shine and the wind doesn’t always blow,” which suggests that wind and solar can’t provide enough power to meet the state’s needs.That may be partially true, but it’s rapidly becoming less true as solar, wind and battery technology improve, and the cost of generating solar and wind energy comes down. It’s already generally cheaper to generate energy from solar instead of coal, and experts say the state could increase the amount of renewable generation by about another 35% before it starts to see reliability issues.
Improvements in renewable technology is quickly making alternatives to DTE, like microgrids and community renewable systems, increasingly feasible. Groups that are pushing for these alternatives are operating on the principles of energy democracy, energy sovereignty, energy equity – the idea that residents and communities should have control over decisions made about their energy, and the decisions should benefit everyone equally, instead of largely benefitting wealthier people. Among mechanisms to achieve these goals are publicly owned utilities that are fully accountable to residents, community solar installations or community choice aggregation. Advocates say such changes will benefit low-income communities like Detroit and older suburbs because they will bring down energy bills and increase reliability.
However, DTE and other investor-owned utilities may view these ideas and changes as threats to their bottom lines and continued existence, and will likely continue to do all they can to fight them. The battle over the proliferation, accessibility, and ownership of renewable energy, microgrids, and community ownership will define the energy industry in the coming decades.
Top image via FreeVector.com.