Michigan regulators may tie utility earnings to grid reliability in ‘straw proposal’ – MLive.com

LANSING, MI – The Michigan Public Service Commission said it will ramp up an audit of the state’s top two utilities and wants public feedback on ways to penalize the companies for repetitive and lengthy power outages.
State utility regulators said they are concerned about the length of time it takes Consumers Energy and DTE Electric to restore power after outages and the large numbers of customers who have repeat power losses each year.
Officials on Wednesday said their “straw proposal” could include financial penalties for utilities whose customers have long outages, and perhaps develop ways to connect the company’s earnings to how quickly electricity is restored particularly in major storms.
Large swaths of Michigan residents found themselves without power time and again during passing thunderstorms in recent years. The latest incident of widespread power outages came with a major storm Aug. 24 that generated seven tornadoes across southern Michigan; some residents didn’t get power restored for five days.
“We share the public’s frustration with the number and duration of power outages, and particularly those who experience outages over and over again,” said Dan Scripps, MPSC chairman.
Experts have said Michigan’s utilities struggle to keep the power on as climate change intensifies.
Bad winter weather and powerful summer thunderstorms rip across the heavily forested landscape more frequently, and watchdogs say Michigan’s grid – rated among the worst in the nation – often falters. Utility date shows strong winds, fallen branches, and toppled trees are more frequently knocking out power to hundreds of thousands of residents, sometimes for days on end.
Related: Burying power lines, trimming more trees may improve Michigan’s failure-prone electric grid
Among the potential new incentives – or disincentives – included in the MPSC’s proposal is financial penalties when utilities’ customers have four or more sustained power interruptions per year. For the year 2022, Consumers Energy had 173,273 such customers and DTE Electric had 163,417, according to annual reports.
Utilities would be further penalized when customers have seven or more long power outages. In 2022, Consumers had 19,821 such customers and DTE had 16,262, records show.
The state agency’s proposal also calls for utilities to be penalized if they have a circuit ranked in the top 10 worst-performing circuits for three or more years in the past five years, as well as considers ways to connect the time it takes utilities to restore power to company earnings.
“By focusing on the places where improvement is needed most, we’re working to better connect the financial performance of the utilities with the experience of their customers. Today’s actions of offering a straw proposal that ties financial metrics to the duration of outages and the number of customers experiencing multiple outages each year is a significant step towards that goal,” Scripps said.
The concept of financially punishing the utilities for poor reliability seems to be gaining traction.
Hours after the MPSC announced its “straw proposal,” more than 100 Michigan residents packed into the Pleasant Ridge Community Center and nearly all who spoke voiced complaints about lost heat, spoiled food, wasted work hours, and exacerbated health risks all connected to repeated and lengthy power outages.
Nina Abrams of Huntington Woods attended the standing room-only public listening session Wednesday evening. She told the crowd how she is offended by the utilities’ billion-dollar profits and big shareholder dividends when service reliability is so poor.
“I would put a moratorium for two to five years on any dividends for any of these energy companies,” Abrams said to raucous applause from the audience.
Related: Ice storm showcased Michigan’s fragile electric grid. Here’s what could be done to bolster it
The MPSC will accept comments on this preliminary straw proposal until 5 p.m. Sept. 22, with reply comments due by 5 p.m. Oct. 20. Comments should reference Case No. U-21400, and be mailed to: Executive Secretary, Michigan Public Service Commission, P.O. Box 30221, Lansing, MI 48909, or emailed to mpscedockets@michigan.gov.
In addition to the new proposal, the MPSC announced it recently awarded a $1.76 million contract for a comprehensive audit off Consumers Energy and DTE Electric. The chosen firm was Liberty Consulting Group of Lebanon, Pennsylvania.
A summary report from the audit must be filed by year’s end, with a final report expected in late summer next year. The utilities will pay for the audit according to state law, officials said.
The independent audit is meant to assess the utility companies’ grid infrastructure and operations.
Both Consumers and DTE must answer questions about downed wire responses, technologies used to detect downed wires, how monitoring systems perform during outages, how critical facilities like hospitals and schools are identified and prioritized for power restoration, and public outreach efforts about dangers and timeframes during power failures.
Company representatives from each utility have previously said they look forward to participating in the audit process.
“Safety is our top priority at Consumers Energy, not just for our coworkers but for everyone in our state. We appreciate the MPSC’s interest in ensuring that energy providers are taking steps to protect and inform people before, during and after severe storms, and improve electric system reliability and resilience,” said company spokesperson Brian Wheeler in October last year when the audit was first ordered.
DTE officials said they would provide a full accounting of storm damage, safety precautions and recovery efforts.
“We will also detail our long-term plans to address DTE Energy’s needed infrastructure improvements to help improve reliability and reduce and prevent electric service outages in the future,” said company spokesperson Joelle Kruczek back in October.
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