Michigan鈥檚 utility regulator told state lawmakers this week that legislation ending the cycle of yearly and rewriting the way utilities earn profit would do more for household energy bills than anything the commission can do on its own.
The Michigan Public Service Commission (MPSC) that were detailed in a letter Chair Dan Scripps sent to Gov. Gretchen Whitmer July 16.
Whitmer asked the commission in June to identify legislative changes that would lower utility bills and improve reliability, along with ways to strengthen energy assistance.
The core of the letter is an argument that many ratepayer advocacy groups have been making for years: that Michigan鈥檚 regulatory model pays utilities , which pushes them toward expensive capital projects and away from cheaper options like tree trimming, maintenance, or better use of existing infrastructure.
鈥淭he most impactful opportunity may be to counter the inherent bias for utilities to invest in capital projects,鈥� the letter says.
What the commission is asking for
Michigan law lets utilities file for a rate increase every 12 months, and the state鈥檚 largest utilities, DTE Electric and Consumers Energy, have effectively done so. The commission wants authority to set multiyear rate plans tied to performance on reliability and affordability metrics.
Other recommendations include:
On the utility assistance front, the commission recommends aligning low-income rate eligibility and LIHEAP-funded programs with the Michigan Energy Assistance Program (MEAP) threshold of 60% of state median income.
The MPSC also recommends redesigning the Home Heating Credit so it stops arriving through tax forms months after the heating season, as well as moving MEAP administration to the commission, and creating a tax credit covering up to half the cost of home weatherization work.
The recommendations follow a setting a goal that no Michigan household spend more than 6% of its income on energy.
Small solar, big power lines, and funding for Michigan鈥檚 鈥榞reen bank鈥�
Balcony solar. he letter takes up plug-in solar: small panel-and-inverter systems that hang on a railing and plug into a standard outlet. The commission says while these are technically already allowed under utilities鈥� existing distributed generation programs, forcing them through the same interconnection studies as rooftop arrays could make them too expensive to bother with.
The MPSC staff plans to take up the question in the commission鈥檚 interconnection technical workgroup, but the letter says legislation may ultimately be needed.
Rep. Will Snyder, D-Muskegon, in March, which would let customers install systems up to 1,200 watts . It was referred to the House Energy Committee.
The Sierra Club is also 731 and 732.
Who gets to build power lines. A 2021 state law gives Michigan鈥檚 existing transmission companies first claim on building certain big power lines, so those jobs never go out to bid. The lines are ones ordered by , the not-for-profit that runs the electric grid across Michigan and 14 other states and decides what new transmission the region needs.
Its costs get spread across the region, so Michigan customers help pay for these lines even when they鈥檙e built in other states. Critics say competitive bidding would make them cheaper. The commission doesn鈥檛 take a side, but wants lawmakers to require MISO to issue a report every three years examining whether the is doing what it was supposed to.
Novi-based ITC Holdings, which owns most of the transmission lines in Michigan鈥檚 Lower Peninsula, is meanwhile to shield these projects from competitive bidding everywhere MISO operates, not just in states that have passed their own laws. Consumer groups and large industrial customers oppose it.
Funding for Michigan Saves. The commission asks lawmakers to create a permanent funding source for , the nonprofit green bank the MPSC seeded in 2009.
The letter credits it with supporting more than $800 million in financing for over 60,000 homeowners for energy efficiency and clean energy projects, with participating residential customers saving an average of $360 a year. State support has come as one-time grants of varying size with no line in the budget, which the commission says makes long-term program design difficult. A $5-million earmark for the coming fiscal year .
Michigan households hit with DTE, Consumers electric rate hikes
The MPSC approved a and . DTE came back in April , which would raise residential rates about 9.7%. Consumers asked for $456 million in June.
The letter argues Michigan is faring relatively well, pointing out that the state鈥檚 average monthly electric bill of $119.31 in 2024 was the 15th lowest in the country.
That number reflects how much power Michigan homes use, which is less than most states, but more than what they pay for each unit. By the price of a kilowatt-hour, Michigan is among the highest in the Midwest, the Energy Information Administration.
Clean energy business groups and the welcomed the recommendations. Michigan EIBC President Laura Sherman said her group has pushed similar legislation for years.
Consumers Energy spokesperson Matt Johnson expressed concern about unintended consequences arising from the recommendations.
鈥淪ome of these recommendations 鈥� could unintentionally undermine efforts鈥� that the company is now taking on affordability and the grid, Johnson said.
DTE would not discuss specific recommendations, and said it is still reviewing the letter. The company said it shares the commission鈥檚 goals, that its customers鈥� bills stay below regional and national averages, and that outage times improved 90% from 2023 to 2025.
Michigan customers had among the longest total outage times in the country in 2023, ranking 50th out of the states and District of Columbia, .
DTE鈥檚 90% improvement figure excludes major storm days, the measure the MPSC uses; the ratepayer advocacy group Citizens Utility Board (CUB) argues that leaving storms out understates what customers actually experience.
Attorney General Dana Nessel, who fights rate increases on customers鈥� behalf, has been harder on the system itself. She 鈥渂oth unfair and unsustainable鈥� after the March increase and asked lawmakers in both parties to rethink it.
The CUB likes multiyear rate plans, with conditions. Interim Executive Director Michael Larson said they could break the yearly cycle, but should 鈥渘ot merely lead to larger rate increases spread over longer periods.鈥� He wants regular public review, no automatic increases, and utility profits tied to how well the companies actually serve customers.
What the commission could do tomorrow
Legislation is required to advance most of these items; the commission can鈥檛 create multiyear rate plans, change the bonus system, or widen assistance eligibility on its own. The DTE and Consumers cases now pending will be decided under current rules.
CUB鈥檚 Larson said there is one lever the commission already controls: the profit rate built into customer bills for utility shareholders, known as return on equity. The MPSC has kept it at 9.9% for both companies in recent cases, slightly above the national average of 9.7% to 9.8%.
CUB鈥檚 expert in DTE鈥檚 last electric rate case calculated that 8.91%, instead of the 10.75% DTE wanted, would save customers about $200 million a year.
Utilities say cutting that rate would make it harder to raise money for grid work. Larson said he 鈥渄oes not believe a reasonable reduction would produce that result,鈥� giving the example of utilities in other states that borrow at lower returns with a better track record of keeping the lights on.
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