BIG DTE HIKE MEANS $6.51 MORE MONTHLY!
The rate increase will take effect Dec. 15 and result in a 6.38% monthly rate increase for customers who use 500 kilowatt-hours of electricity per month, equatable to $6.51.
DTE is said to need the increase to pay for infrastructure investments to increase reliability and deploy clean energy generation faster.
On the decision, House Minority Leader Matt Hall (R-Kalamazoo), House Minority Floor Leader Bryan Posthumus (R-Rockford) and Rep. Mark Tisdel (R-Rochester Hills) pointed to the rise in Michiganders’ electric bills as proof that “mandates come with expensive compliance costs."
“As the state ramps up new energy requirements, Michiganders’ electricity prices will keep ramping up, too,” Tisdel said. “We’re already seeing rates rise because of previous ‘clean energy’ regulations, and burdensome new laws will require costly investments and make electric bills more expensive for residents and local businesses.”
With clean energy legislation signed by Gov. Gretchen Whitmer this week, he said the price increases will keep coming.
Mullkoff said the company also initially requested a permanent capital structure of 50% equity and 50% long-term debt, along with funding for tree trimming research funding in 2025 and several electric vehicle charging pilot programs.
Along with the rate increase, the MPSC approved the requested debt-to-capital ratio, and a two-year investment recovery mechanism (IRM) designed to help track investments in DTE’s electric distribution system and ensure continued investment.
The $350 million in investments in 2024 and 2025 will go towards circuit conversions, sub-transmission redesign and rebuild, breaker replacement, underground residential distribution replacements and a 4.8 kilovolt circuit automation.
“The commission emphasizes the importance of providing transparency to the selection and prioritization of certain distribution grid investments,” Mullkoff said.
The program is limited to two years and is expected to conclude late summer 2024.
Other requests that were approved include:
– An additional $2 million in funding for DTE’s pilot program providing $1,500 rebates for income eligible households which purchase electric vehicles under $50,000.
– $9 million for the utility’s planned 220-megawatt Trenton Channel Battery project.
– Funding for DTE’s strategic capital program to improve reliability and modernize the grid.
– Funding for DTE’s efforts to harden the city of Detroit’s 4.8 kV grid, in exchange for providing a detailed, longer-term plan for the work, with performance benchmarks and an analysis of equity impacts using a Department of Environment, Great Lakes and Energy interactive mapping tool.
– A request to accelerate DTE’s ongoing tree trimming surge in an attempt to address outages in Michigan, along with a study on tree trimming on residential service drops, or the electric lines between power poles and homes, which is normally maintained by homeowners, but can have an impact on the length of outages.
– The MPSC also ordered DTE to conduct a study examining the impact of on-peak rate structures on low-income customers before they transition to the new time-of-day rates, which were implemented in March 2023 and incur higher charges on weekdays between 3 and 7 p.m. June through September.
Costs that were not approved included $346 million in capital costs, $133 million in information technology costs and $59.6 million in avoidable capital expenses associated with the coal-fired Monroe Power Plant.
Attorney General Dana Nessel said when the case was filed, she noticed that it was the largest requested increase her office has ever seen, “and that my team would review it with a fine-tooth comb to make sure customer interests are protected.
“That is exactly what we did, and today’s Commission order validates the extensive work my office did in an attempt to limit any rate increase to reflect reasonable expenditures,” Nessel said. “While I am pleased the Commission limited the increase, I recognize that $368 million is still a tremendous rate increase and is too high for many ratepayers, especially right before the holidays.
She said she also advocated for strong metrics and benchmarks to hold DTE accountable for poor electric reliability, and was “disappointed” it was not adopted.
DTE’s last rate increase was granted in November 2022, a $30.5 million increase but a 90% reduction from the $388 million the utility had requested.
MPSC Chair Dan Scripps said the focus with this order was on improving grid reliability and decreasing the number and duration of outages.
“And that’s as it should be,” he said. “The Commission remains committed to supporting reasonable and prudent investments in basic grid infrastructure, so long as there is adequate support for these investments on the record.”
The Michigan Freedom Fund’s Mary Drabik said: “the utility companies took Democrats for a ride and Michiganders are paying the price.
“Power companies agreed to Democrats’ wildly unrealistic green energy laws in exchange for the ability to continue to raise electricity rates without guarantee of improved service for customers, and the second it became the law of the land, the rate-raising began,” she said. “As utilities continue to work hand-in-hand with the Michigan Public Service Commission which fails to hold them accountable, Michigan residents can count on increased electric bills and continued blackouts."
FUNDING GAPS, INFRASTRUCTURE AMONG POPULATION GROWTH NEXT STEPS
Those and other recommended next steps were delivered to the Growing Michigan Together Council as the body convened by Governor Gretchen Whitmer prepares to issue population growth strategy recommendations on December 15.
The council met Friday in Detroit, with members indicating that it was still developing its recommendations based on a draft report presented by Guidehouse, the consultants hired to identify the current barriers stymying population growth and retention. The meeting was not the group’s final gathering, with members saying they would meet again to deliver final recommendations.
Friday’s meeting was one day after Gongwer News Service obtained a working draft of the report the council will submit to the governor later this month, which included recommendations for regional transit, passenger rail and overhauling funding mechanisms for education and roads.
The Guidehouse draft report was meant to invoke discussion and lay out in finer detail what the council might propose for as a strategy for the state.
Various Guidehouse employees detailed key findings, focusing on a fiscal analysis of the state, its revenue and expenditure stature compared to peer states and the nation, per capita education spending, infrastructure expenditures, and labor force participation.
Shaun Fernando, a partner with Guidehouse, said the report found that Michigan has over the last 20 years seen a decoupling from national population growth statistics, which in turn has created a gap the state is unlikely to close within the next 20 years. While several factors contributed to the decoupling, Fernando said the future outlook shows that Michigan’s number of aging residents and its inability to retain residents represents concern over further decline.
In 1980, 60 percent of Michigan’s residents were made up of younger residents in the under 19 years old and 20-34 years old brackets. Just 10 percent of its population were aging adults 65 years or older. The projections for 2045 show that shifting, Fernando said, with 21 percent of its population in that older adults category and 41 percent of the population under the age of 34.
A graph that once looked like a pyramid in the ’80s in the future would look more rectangular. That shows concern about the state not attracting enough younger people to balance the pyramid, he added.
The topline recommended next steps were for the council to focus on talent, prosperity and economic development, Fernando said.
In the talent category, it was recommended that Michigan first and foremost address educational funding gaps, which have declined by $5 billion since 2011. The state should monitor the impact of increased funding for education, including its recently passed school investments in the Fiscal Year 2024 education budget.
Addressing barriers to employment is another talent-based consideration, as Michigan continues to have a disproportionately low rate of labor force participation. The state should identify strategies growing states have used to address those barriers, including child care, elder care and transportation.
Identifying attractive growth industries could also help on the talent front, looking to peer states and those most expected to drive growth in Michigan. The state should aim to align its workforce development with educational and skill program supports to meet the needs of those industries.
Prosperity considerations for the council include a better understanding of inequity drivers, placemaking strategies and natural resources supports. The state should further analyze disproportionate inequities in both education and health outcomes of its current residents, focusing again on peer states Michigan could follow.
Attracting young workers and families with placemaking and what was defined as "drive-in migration" could include the building of new affordable housing, increased accessibility throughout key communities and creating better quality school systems.
Natural resources investments were also key to create an environment for sustained prosperity. The state should focus on bolstering funds for parks and recreation to maximize competitiveness against states with fewer opportunities to experience the outdoors and Michigan’s natural splendor.
The economic development recommendations included bolstering Michigan’s infrastructure investments, which have largely increased but based on bonds with debt service or through short-term federal funding. The state should explore alternative funding sources like public-private partnerships to help complete and maintain critical infrastructure projects. Those partnerships should seek long-term funding strategies beyond the lifespan of temporary investments already made by the state.
Focusing in on the jobs of the future, so to speak, could also get Michigan back in control of its population growth destiny. Creating incentives for foreign investments and aligning them with homegrown entrepreneurship was recommended, some of which the state is already doing, was suggested. Further aligning those strategies increased pathways for future employees with the needs of high-skill, high-wage industries could simultaneously drive population and economic growth. That again comes down to increasing education and closing funding gaps.
A DEEPER LOOK AT THE ROAD AHEAD: Kristy Throndson, an associate director at Guidehouse, said that key revenue and expenditures in the state have grown slowly or declined in real terms over the last 40 years, which puts the state at risk in terms of educational and infrastructure outcomes.
A double-edge sword for Michigan in that regard is its status of being a relatively low tax state, which depending on one’s view of taxes could be a great or bad situation. Throndson said Michigan has fallen in the ranking of tax collections and overall tax burden in recent years.
Total state and local tax revenues in Michigan have only grown by 3 percent since 2007. Adjusted for inflation, the median income in Michigan rose 3 percent in that same period.
Compared to peer states, Michigan in 2021 was at an 8.7 percent rate of total state and local tax collections per percentage of personal income. That puts Michigan in line with states like North Carolina and Washington state, while its Midwestern neighbors in Indiana and Minnesota saw higher rates, 9.5 percent and 11.3 percent, respectively. The entire nation’s average tax collections per capita is at a rate between those neighbor states at 9.9 percent.
Those figures appear to be on a downward trend, Throndson said. From 2007 to 2021, Michigan fell two places in that ranking of tax collections per capita.
Decreases in overall education spending have also affected Michigan’s competitiveness. The state was 8th in the nation for per capita state and local education spending in 2007. It fell 20 ranking spots over the subsequent decade and a half. Michigan was ranked 31st in 2021.
Michigan’s fall from grace in education spending now places the state well below the national average and in the bottom half of identified peer states, including Indiana and Minnesota but also Washington, Colorado and North Carolina.
Although Michigan has made strides in upgrading and bolstering its infrastructure with one-time money, new or alternative long-term funding sources were needed in the next 20 years. If it does not find new sources, Michigan is poised to drop in its ranking, Throndson said.
Michigan was ranked 43rd in 2007, but its recent efforts placed that state at 29th in the nation as of 2021. Michigan is now more in line with national infrastructure spending but is still behind Colorado, Minnesota and Washington, said Emily Plumley, a managing consultant with Guidehouse.
Compared to those peer states, Michigan’s educational attainment, employment growth and labor force participation were all notably lower than its peers. A focus of the Whitmer administration has been to close inequity gaps for women and minority populations, the state is currently faring poorly compared to peer states in outcomes for women, minorities and less-educated residents.
Michigan’s fourth grade reading proficiency rate for Black students is 10 percent lower than growing peer states and 25 percent lower than white students in Michigan. The largest proportion of adults 25 years or older with bachelor’s degrees was seen in Asian populations at 57 percent, while Hispanic or Latin populations in the state made up its smallest proportion at 20 percent.
Fewer Black adults 25 years or older held bachelor’s degrees, 19 percent, than Black adults in peer states and the nation overall, which sits at a rate of 25 percent.
Labor force statistics did not fare any better, Plumley said. Those without a college education saw lower labor force participation in Michigan than any other peer state analyzed in the report. Labor force participation rates for those with some college or an associate degree stood at 78 percent but was lower in Michigan then three of its five peer states and the U.S. average for that population.
In all, Fernando said that slow growth will directly impact that state’s ability to gain revenue and would drive up state expenditures in programs like Medicaid and public welfare, as well as health and hospital expenditures.
If the state seeks to truly address the problem, it must attract and retain a population of 20-34 year olds at working age. Individual income taxes must be funneled to areas of need to meet demands of that population, again with a focus on infrastructure, education and recreational amenities to give Michigan a greater sense of place, Fernando said.
Those population remediation efforts may ultimately place a larger burden on local government budgets, so additional state support may be needed to offset local spending. Smaller local governments also may need what was described as greater autonomy to use new or innovative funding tools to enhance services. Fernando mentioned road user charging, municipal bonds or seeking public-private partnerships.
FILLING BUS DRIVER OPENINGS SLOWED BY DRUG TESTING
Clark Harder, of the Public Transit Association, said local agencies share the same problem, “The biggest hurdle that transit agencies face in hiring and staffing, particularly on the driver front, is that drivers have to pass alcohol and drug tests.”
The requirement to be drug free is necessary, but still creates barriers to recruitment and retention, Harder said.
“You want the people driving large buses properly screened. But it’s making it very difficult for us to lure people into driving transit vehicles because the requirements are much more stringent than for other jobs,” he said.
Heidi Wenzel, director of transportation for the city of Ionia, said the U.S. Food and Drug Administration regulates alcohol and marijuana testing of drivers.
“There’s pre-employment testing, random testing, reasonable suspicion and post-accident testing,” she said.
Wenzel said the biggest problems agencies are seeing stem from the legalization of marijuana in Michigan. While consumption of marijuana is legal, if it’s found in a bus driver’s drug test it could be grounds for termination because of federal standards.
“No matter what you have in your system, whether it’s medical (marijuana), whether you use CBD oil that has THC in it, it’s not regulated in terms of the content. You can’t guarantee that you’re not going to get any THC in those oils, so it flat-out does not matter,” Wenzel said.
THC is the main psychoactive component in marijuana and is derived from cannabis plants.
According to the Michigan Cannabis Regulatory Agency, THC is responsible for the temporary alteration of one’s psychological state.
Wenzel said marijuana is unique because it stays for a long time in the user’s system, and the presence of any THC from CBD products could cause a failed drug test, Wenzel said.
Scott Borg, the transportation director for Harbor Transit in Harbor Springs, said the rules pertaining to drug testing deter some people from applying for driver positions.
But, the rules are in place for a valid purpose, Borg said.
“For the safety of the general public, we need to have strict laws to prevent the use of drugs. Not only does the drug test cover alcohol, but it covers narcotics in the system,” Borg said.
Harbor Light suffered bus driver shortages due to COVID-19 but is currently back to full staff, he said.
Wenzel said revising the testing law was considered when marijuana was legalized.
“There was talk when first legalizing medical marijuana for regular recreational consumption about the impact that it would have on industries,” she said.
Meanwhile, there are some movements federally to change the way drivers are tested.
In May, the U.S. Department of Transportation revised its rules on the types of tests that can be performed and amended the program to include oral testing.
Wenzel said that formerly, testing was allowed only by urine sample.
“There’s some traction and understanding of the impact of marijuana. Even though it’s not affecting you anymore, most other substances are going to show up and attach after a shorter period of time,” Wenzel said.
Wenzel said everybody has an opinion on drug testing.
“You don’t know how things are going to impact drivers. You have a lot of different arguments towards different components of marijuana,” she said. “But for me, it’s contemporaneous. Are you under the influence? Is it an immediate impact on your ability to do your job?”
Harder said drivers don’t think about what they’re doing when they use marijuana, and that can cost them their jobs.
“Because you smoked a joint three weeks ago, it doesn’t necessarily mean you’re incapable of driving a vehicle. But that is a standard that we have to deal with in the industry. And it’s problematic for us,” he said.
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