Changes coming after audit exposes why Consumers, DTE have major outage problems

Michigan’s two largest utilities will be expected to use a deep-dive audit of their outage-prone grids as a roadmap to improve historically poor electric reliability for more than four million customers across much of the state.

On Thursday, June 12, state regulators with the Michigan Public Service Commission ordered both Consumers Energy and DTE Energy to evaluate ramping up tree trimming along power lines, better protect the public from dangerous downed wires and address maintenance backlogs.

The directives addressed 75 recommendations independent experts with The Liberty Consulting Group delivered in 2024 after spending months looking under the hoods of the sprawling for-profit utilities.

“This audit provided an unprecedented look at the operations of the electric systems serving more than 80% of Michiganders,” said Public Service Commission Chair Dan Scripps in a statement.

“The steps the commission is outlining today build on what we’ve learned from the audit and a series of initiatives going back nearly a decade and take concrete actions to continue addressing reliability issues that have frustrated customers.”

The third-party investigation came amid widespread angst directed at the utilities following days of outages due to severe storms in the summer of 2022 affecting nearly 500,000 customers. A 14-year-old girl died in Monroe after touching a fallen power line.

Over nearly 500 pages, it confirmed the power companies ranked worse than average among utilities nationwide for restoring service during outages. They dealt with aging equipment, often choked by trees, the top cause of outages. Trimming and inspections were backlogged more than a decade in some cases.

Regulators now say the lessons learned will be a North Star of sorts as they make key decisions around rate hikes and grid planning now and in the coming years.

Both DTE and Consumers are seeking some of the largest electric rate increases in decades, as they race to improve performance and transition to cleaner power sources.

In statements, spokespeople for both utilities said the companies looked forward to working with regulators to deliver a safer, more resilient power grid.

“Consumers Energy is fully committed to delivering energy reliably to our customers,” said spokesperson Brian Wheeler. “We have been improving our service to communities through our Reliability Roadmap, reducing the length of power outages last year and moving closer to our goal to restore power in all situations in less than 24 hours.”

DTE spokesperson Ryan Lowry said regulators’ order “aligns with our commitment of reducing outages by 30% and cutting outage time in half by 2029,” pointing to a 70% improvement in outage time last year amid $1.5 billion in grid investment, although he acknowledged less severe weather also played a role in that outcome.

Ratepayer advocates said the regulatory orders affirm what they’ve long believed.

“DTE and Consumers have had poor reliability for many years because they have failed to systematically clear vegetation and inspect and repair the distribution system. The commission is now instructing these utilities to timely inspect all aspects of the system and make repairs,” said Amy Bandyk, executive director of the nonprofit advocacy group Citizens Utility Board of Michigan.

Many of the audit findings have already been implemented or are being put in place now, said Public Service Commissioner Katherine Peretick on Thursday. She cited the companies’ hiring of staff meteorologists to better dispatch crews during severe storms as an example.

Still, the audit also sparked tension over the best path forward. In legal filings last year, both DTE and Consumers disagreed with key recommendations.

Read more: Consumers, DTE push back on some findings of major audit of their outage problems

Auditors questioned whether the utilities’ goals of rapidly bringing reliability performance out of the basement were “too aggressive” and could be reached without massively inflating customer bills and stressing company resources. Both utilities chafed at the suggestion.

But regulators are now asking the companies to evaluate what it would look like to extend their benchmarks over five or 10-year timelines, with a particular focus on rate impacts.

The Thursday orders also direct the companies to report a range of information on downed power lines and how they may be secured more expediently to protect the public. The utilities should also prioritize replacing equipment based on inspections and actual conditions, rather than solely based on age, regulators said.

Each utility also has its own unique marching orders.

Consumers must evaluate the benefits and costs of trimming trees along its 90,000-mile system every four years. Now, it’s moving toward a seven-year cycle, and the audit said some parts of the system hadn’t been touched in 20 years.

In regulatory filings, Consumers raised concerns about the cost implications for customers of speeding up the trimming. Unlike capital investments in equipment and facilities, that kind of regular maintenance does not earn a return for company shareholders and is included on bills the year the money is spent, rather than spread out over time.

Customer advocates have criticized the major utilities for neglecting routine maintenance tasks, while favoring costly capital projects that boost shareholder profit — a criticism the companies push back on.

Still, in its recent request to hike rates some $436 million, Consumers has proposed ramping up to a five-year tree trimming cycle for major parts of its grid — more in line with the audit’s findings.

Regulators want DTE to develop a strategy for improving safety and reliability of its legacy 4.8-kilovolt system, which requires more time to locate and fix faults and is riskier to workers and the public than more modern systems.

The utility also must plan to address inspection and maintenance backlogs that the audit revealed plagued parts of its grid. Regulators also want it to submit deeper analyses of its planning when making investments to ensure they are prioritized cost-effectively.

DTE is currently seeking a $574-million rate increase, its second largest ask in more than 20 years.

Both utilities have taken flak from customers and consumer watchdogs alike for asking to hike rates almost on a yearly basis, nearly as soon as they are legally able.

Bandyk said she hoped regulators will take steps to lower the rate of profit utility shareholders make on investments, as she said it surpasses the national average and rewards poor performance.

Rather than letting them earn a significant return on the spending surge they will use to fix past bad performance, regulators could allow it to be financed at debt rates through a process known as securitization, she said.

“This will take the spending surge to repair the utility distribution systems off the utility books so they won’t profit from it,” Bandyk said.