Overview:
-A Michigan Public Service Commission audit finds DTE Energy and Consumers rank poorly on the frequency and duration of outages.
-The report notes that both utilities have failed to meet their tree-trimming goals and that some infrastructure is over a century old.
-DTE is already using the audit to push for its proposed $456.4 million rate increase, which it says is necessary to modernize the grid and improve reliability.
An audit released this week found that DTE Energy and Consumers Energy ranked poorly for the frequency and duration of power outages. Both companies underinvested in tree trimming, and their critical infrastructure has deteriorated.
The Michigan Public Service Commission ordered the audit following the February 2023 ice storm that left more than 700,000 Michiganders without power, with some residents unable to heat their homes for days.
The audit backs up ratepayer advocates who have said for years that DTE and Consumers fail to keep up with tree trimming while the companies focus on capital investments that automatically earn their shareholders a return on equity.
However, the audit’s finding that grid infrastructure is often outdated could help utilities push for further rate hikes.
Amy Bandyk, executive director of the Citizens Utility Board of Michigan, told Planet Detroit that the audit supports CUB’s position that DTE and Consumers need more basic maintenance to reduce outages. She said big utilities focus too much on costly capital projects while overlooking cost-effective solutions like more frequent tree trimming.
“Big utilities are…proposing capital expenditures that cost ratepayers a ton while delivering questionable benefits for reliability,” she said.
MPSC Chair Dan Scripps said in a statement that the audit, conducted by Liberty Consulting Group, an independent firm based in Pennsylvania, was the first of its kind in Michigan.
“The audit underscores that now is the time for both companies to focus more on strategic investments to prevent outages rather than reacting to them,” Scripps said.
Mark Brewer, an attorney and former chair of the Michigan Democratic Party, was unconvinced the audit would change much, suggesting utilities’ political spending could help them dodge accountability.
“Prediction: despite deplorable service and excessive rates DTE Electric and Consumers Energy will lobby and buy their way out of accountability like they have for decades,” he wrote on X.
Last year, Michigan legislators passed nation-leading clean energy legislation with few consumer protections, an oversight that State Rep. Abraham Aiyash (D-Hamtramck) said was due to utility influence.
He said utilities were “the elephant in the room” during negotiations over the bill package and that legislators understood that utilities “have to at least be neutral on the passage of bills in order to move them across the finish line.”
DTE and Consumers didn’t directly respond to concerns about their political spending. DTE spokesperson Jill Wilmot said, “DTE remains committed to improving reliability for our customers.” Consumers spokesperson Brian Wheeler said, “Consumers Energy will continue to advocate to build a smarter and stronger power grid that serves Michigan reliably 24/7.”
DTE and Consumers fail to trim trees as reliability suffers
The audit found that both DTE and Consumers failed to meet their tree trimming goals, which increases grid vulnerability as trees hitting power lines is a major cause of outages.
DTE aims to trim trees on a five-year cycle, while Consumers aims for a five- to nine-year cycle. But in practice, DTE trims trees on a five- to seven-year cycle, and Consumers has a trimming backlog that means it’s on a 10-year cycle.
The report found that two similar investor-owned utilities in Illinois, Commonwealth Edison and Ameren Illinois, had four-year trimming cycles and had fewer outages and shorter restoration times following an outage than DTE and Consumers.
Following the ice storm in 2023, critics noted that the publicly-owned Lansing Board of Water and Light experienced only a handful of outages. Lansing received significant ice during the storm, albeit not as much as southeast Michigan. LBWL had stepped up its tree trimming program after the 2013 ice storm, which led to extensive outages.
Advocates have argued that DTE deprioritizes tree trimming because utilities can only recoup the maintenance cost from ratepayers. Instead, the cost of new equipment like transformers or power polescan be added to the company’s rate base, earning its rate of return on investment, including 50% equity for stockholders. Shareholders include DTE executives, who receive millions in stock options.
The audit found that in 2022 and 2023, both DTE and Consumers were in the bottom 25% of utilities for Customer Average Interruption Data Index (CAIDI), a measure of the time it takes to restore power.
More than 13% of DTE’s customers experienced four or more power outages in 2023 and 45% dealt with an outage lasting more than eight hours. Over 10% of Consumers’ customers experienced four or more outages and 25% lost power for over eight hours.
Aging infrastructure could mean further rate hikes for Michigan customers
Significant portions of DTE and Consumers’ infrastructure are over a half-century old, with some equipment exceeding the century mark, according to the audit.
Around 40% of DTE’s substation transformers were installed before 1960 and some were put in place in 1924. The report also found that the company doesn’t track the age of its service transformers. Roughly 40% of DTE’s circuit breakers and reclosers date from between 1930 and 1960.
The report said that DTE’s transformers were older than comparable utilities, but this wasn’t the only factor that needed consideration.
“While condition rather than age should drive transformer replacement, periodic excessive loadings contribute to high DTE’s substation transformer failure rates,” the report said.
The audit found Consumers also had aging infrastructure. Around 45% of its substations were installed between 1903 and 1960, with a large number built in the 1950s.
DTE responded to the audit with a statement saying the company was “laser-focused on delivering on our commitment to our customers–reducing power outages by 30% and cutting outage time in half by 2029.”
The company said it would invest in both infrastructure and tree trimming, including “smart grid” technologies that allow system operators to evaluate problems.
Wheeler, with Consumers, said the company was adding technology, burying power lines and trimming trees to improve reliability in the face of more frequent storms.
“Michiganders are facing more severe and frequent storms, which is why we announced our Reliability Roadmap in 2023, a blueprint for fewer and shorter outages, including no customer going more than 24 hours without power,” he said.
DTE is already using the audit to argue for its proposed $456.4 million rate increase, which it says is necessary to modernize the grid and improve reliability.
In emails related to the rate case, DTE executives emphasized the audit’s focus on pole top maintenance and modernization, capital investments that Bandyk said could be paid by customers while creating profits for DTE shareholders.
However, at last week’s hearing on the proposed rate hike, many Detroiters questioned why service had yet to improve with previous rate increases, saying ratepayers were already making difficult choices between paying for things like food and medicine and their utility bills.
“DTE and Consumers Energy need to get (tree trimming) in order before regulators should even consider the massive increases in rates that both have requested,” Bandyk said.