Within two years, the Michigan Public Service Commission will impose penalties on the state's two largest utilities for missing reliability targets, or award incentives for meeting them.
Consumers Energy and DTE Energy have long been among the lowest 25% of electric utilities nationwide for frequency and duration of outages.
The Michigan Public Service Commission aims to force significant improvements by imposing up to $10 million in penalties on each company if they miss targets, such as reducing the amount of time customers are without power after storms, or not fixing the worst performing circuits in their territory.
They could get the same amount of incentives for meeting or exceeding the targets. Penalties would come from utility profits; incentives would be charged to ratepayers, since they would benefit from the reliability improvements.
In a press release, Michigan Attorney General Dana Nessel said the Commission's order largely adopted the measures her office advocated for in public filings in the case, but said there is "still work to be done to force meaningful improvements and responsibility from Consumers Energy and DTE."
"Although a great first step, these incentives and penalties don’t take effect until 2026 and no penalties are assessed until 2027, and the MPSC won’t be implementing all of the protections for which we’ve advocated over the years."
In an emailed statement, Amy Bandyk of the Citizens Utility Board of Michigan said her group had argued in filings that the order should include only penalties, not incentives.
"A utility can make marginal improvements in its reliability that still leave it among the worst utilities in the country on outage performance, and not pay any penalty. [And] $10 million is so small in the context of the revenue that the utilities bring in, it is unlikely to lead to much immediate change in their behavior. But hopefully, it will be a starting point to eventually have more robust penalties in place. "
Both utilities said the order supports what they are already doing to improve reliability.
"We believe this new approach will reinforce our Reliability Roadmap that is already making Michigan’s electric grid more reliable," Consumers Energy said in an emailed statement.
"DTE Energy supports the framework’s focus on reliability, as it aligns with the company’s commitment of reducing outages by 30% and cutting outage time in half by 2029," the company said in its emailed statement.
Editor's note: Consumers Energy and DTE Energy are among Michigan Public's corporate sponsors.
