In its November 7 order in the DTE Gas Co. rate case, the Michigan Public Service Commission (MPSC) approved several key decisions to protect consumers and pave the way for more affordable heating options in the cold-climate state.  

DTE filed its request to raise rates by $266 million on customers in January 2024, noting that most of the dollars would go toward pipeline maintenance and modernization. This comes as part of a broader trend affecting the industry – natural gas utilities across the country continue to raise delivery rates at unsustainable levels, leaving consumers with skyrocketing gas bills.  

As a step toward more affordable heat, the MPSC cut the utility’s request by more than half in its order approving a $113 million rate increase. For consumers, this rate increase will only result in an extra $1.98 per month on DTE gas bills, much lower than the 10% increase DTE asked from its regulators.

But Michigan regulators didn’t stop there, seeking to also address some of the root causes that will be driving future rate impacts. The order requires DTE to file an updated “gas delivery plan,” the utility’s roadmap to how it intends to spend consumer dollars on pipeline infrastructure projects over the next 10 years. In the revisions, DTE must consider how different energy transition pathways will impact projected demand for gas and consumer costs. Through inclusion of alternatives to capital investment, such as non-pipeline alternatives, and analysis of how electrification will change infrastructure needs, DTE must look for lower-cost, lower-risk solutions to serve Michigan with affordable heat.

Critically, the Commission ordered that the utility must take steps to meaningfully engage interested stakeholders in the development of its updated gas delivery plan, putting power in the hands of affordable heating advocates who will now have the opportunity to weigh-in on how effective the utility’s proposed plans are at achieving lower-cost options for serving Michigan consumers.

This decision is timely as public utility commissions across the country continue to grapple with the prospect of declining gas throughput in an era of accelerated infrastructure spending. Michigan now joins the ranks of states like Minnesota, Missouri, Nevada, Colorado, Oregon, Maine, and New Hampshire, all of which are experimenting with different ways to hold utilities more accountable for the risk of overspending on infrastructure that may become underutilized, or even obsolete, as market conditions in the heating sector evolve.

This decision lays the groundwork for more affordable heating for DTE’s 1.2 million residential and 90,000 commercial customers. But as we celebrate the MPSC’s order to cut back on rate increases and require DTE to plan for a more financially sustainable future, a recent Consumers Energy filing announcement for a rate increase reminds us that another 1.6 million residential and 130,000 commercial customers are still entirely exposed to all of the concerning trends affecting gas utilities nationwide. It is clear that more action is needed to protect the remainder of Michigan gas customers from increasingly unaffordable gas bills.

United’s 2023 Consumers Energy Gas Bill Impact Analysis showed that Consumers customers are at risk of rate increases of 49% because of the utility’s own projected spending and energy efficiency and electrification trends. This means that the average monthly residential customer bill could increase up to $131 by 2030, over $55 per month more than 2021 levels on average. If Consumers Energy, and other Michigan gas utilities in the future, are not required to consider lower-cost options to serve customers (as DTE now is), millions of ratepayers are at risk of upwardly spiraling heating bills. Status-quo spending on expensive gas pipeline networks could deliver especially devastating blows to the pocketbooks of low-income and vulnerable Michigan homeowners, renters, and fixed-income seniors who cannot swap out their appliances for cost-effective electric alternatives in order to leave the gas system altogether. 

Meanwhile, as Michigan customers take advantage of newly launched electrification and efficiency dollars from the Inflation Reduction Act (IRA) Home Energy Rebates programs, and continue to take advantage of IRA tax incentives and other state, local, and utility electrification programs, we must also invest consumer dollars in modernizing and hardening Michigan’s electric grid. Grid modernization and efficient electric technologies, such as ground source heat pumps, can ensure safe and reliable heating service through even the coldest winters as we decarbonize more of the state’s building stock. And the proof is out there – northeastern states, northern European countries, and Canada have shown that heat pump adoption in cold-climate geographies is not just possible but is beneficial for the grid and for ratepayers’ bottom-lines. Michigan has work to do to ensure that its grid is up to the task, but that task is critical for all modern needs, not just heating buildings.

Ultimately, consumers only have so many dollars to budget for utility bills. Between burning money on spiraling gas pipelines costs – or investing in a modern, reliable electric grid that will power our homes, offices, and transportation – the best choice is clear. Extending DTE’s new requirement to file updated, stakeholder-engaged gas delivery plans to Consumer’s Energy will promote responsible, smart, and cost-effective investments in the future of affordable heat in Michigan. We hope the MPSC acts to align its oversight of both utilities at its next opportunity and continues its strong work to protect ratepayers now and into the future.