According to the U.S. Energy Information Administration, a third of American households reported some form of energy insecurity. What is energy insecurity? It can be defined as an inability to adequately meet basic household energy (electricity, gas, etc.) needs, so that they can safely power, heat and cool their homes.
DTE Energy and Consumers Energy provide natural gas and electricity to 85% of Michigan. In 2019, DTE Energy made $1.2 billion dollars in profit. On May 12th, regulators approved a 4.7% rate hike for DTE’s residential customers.
Goals: Grade Levels: 9-12
Learn about energy justice
Supplies: Time: 30-45 minutes
First, read this short article from the Detroit Free Press: https://www.freep.com/story/news/local/michigan/2020/05/12/dte-electric-rates-bills/3114128001/
Next, read or listen to this article from the Metro Times (25 minutes):
Or read the quoted sections from the article below:
DTE and Consumers serve about 85 percent of the state, and Michiganders had the nation's 14th most expensive electric and gas bills in 2017. But the state ranked second worst in terms of time to restore power after an outage, according to an analysis of federal data by the Citizens Utility Board of Michigan, which advocates for residential customers. (West Virginia is No. 1.) At the state level, CUB found DTE and Consumers have among the state's most expensive electric bills, but their customers on average spent the most time without power in 2017, the last year for which data is available.
Advocates also say the current situation illustrates what happens when the state fails to adequately regulate power companies. The Michigan Public Services Commission is a state agency charged with approving or rejecting rate increases while monitoring the utilities' performance and service. The commission approved a whopping $779 million in DTE rate hikes over the last four years. That accounts for the nation's second-highest jump, yet the outages continue.
With the Public Services Commission's blessing, DTE and Consumers successfully shifted the cost burden from industry to residents over the last 10 years. While residents' electricity costs increased by about 50% statewide, industry's costs remained about the same. Consumers and DTE also convinced Michigan's Republican-controlled legislature to kneecap the state's rapidly growing home solar industry with a 2016 set of laws that devalued solar energy.
Meanwhile, Michigan's power plants are dirty. CUB's analysis found the state's plants emit more carbon dioxide, sulfur dioxide, and nitrous oxide than the national average, while renewables account for only 8.4% of the state's power — also below average.
"The report shows how residential rates have gone up steadily over the last decade ... and residential customers have an overall feeling that they're now paying really high bills and not getting the service that they paid for," says CUB executive director Amy Bandyk.
Part of what’s behind DTE’s and Consumers’ high bills are profits that go to investors, as well as executives’ salaries and political spending. DTE’s customers will pay an extra $650 million — or $13 per month for an average customer — this year to satisfy investor obligations. That means Michiganders pay an extra $13 each bill that does nothing to improve service. It simply goes to investors.
"The large companies have some higher overhead costs that the municipal utilities and cooperatives don't have," says Douglas Jester, a partner at consulting firm 5 Lakes Energy, which consults for CUB.
While executive salaries don't account for much of the overall costs, they're a point of frustration among the companies' critics. Consumers Energy CEO Patti Poppe's compensation package topped $8 million last year, while former DTE Energy CEO Gerry Anderson, who stepped down in July, received a package worth nearly $11 million. DTE's combined top executive salaries total nearly $25 million. By comparison, Mike Hummel, general manager of Phoenix's Salt River Project, one of the nation's largest public utilities, earns $1.04 million, and its top executives' salaries total less than $4 million.
Now, answer the reflection questions below.
What type of model does the state of Michigan have for supplying heat and electricity for residents? Is it a public or private utility?
What is the difference between a public and a private utility?
Do you know members of your community who have had their energy shutoff or are energy insecure?
Is it fair that people have their heat and electricity shutoff due to the inability to pay? Is it safe for people to have their heat and electricity shut off? Why or why not?
Does everyone have a right to have heat and electricity? Are these human rights?
What were the profits of DTE Energy in 2019? (hint: check the Context section)
DTE Energy and Consumers Energy are quasi-monopolies, have no competition, and are guaranteed profits for shareholders. Is this fair?
Should companies like DTE be able pay shareholders before improving services for users?
Should they be able to increase the rates that users pay while guaranteeing profits for their shareholders?
How could DTE pay for new infrastructure costs, like green energy, without raising rates on customers?