DTE Rate Case Order Sends Clear Message on Energy Equity

Michigan Public Service Commission rejects new fees for solar customers, greenlights innovative electric bus procurement model and low-income EV rebates

On Friday, November 18, the Michigan Public Service Commission (MPSC) released its final order in utility giant DTE Energy’s 2022 rate case. 

In its order, the MPSC approved a rate increase of $30.5 million, a fraction of DTE’s requested $388 million. Commissioners also voted to reject an unprecedented “demand charge” fee for solar customers. If approved, rooftop solar customers would have been reimbursed just 3.5 cents per kilowatt hour, a steep decline from the previous standard of 50% of the retail rate of electricity. The Commission is further requiring DTE to propose a successor to the current distributed generation (DG) tariff program within 90 days. This successor, which would go into effect if DTE chose not to expand the current voluntary cap, will be considered in a separate contested proceeding.

“The Michigan PSC took several critical steps to strengthen the state’s rooftop solar and storage market, including rejecting the punitive mandatory tariff proposed by DTE and increasing the outflow credit for distributed generation customers,” said Kevin Lucas, Senior Director of Utility Regulation and Policy for the Solar Energy Industries Association. “We’re very glad to see the PSC affirm the value that distributed generation provides to the grid and make notable progress toward expanding distributed energy resources, rather than stifling them.”

Clean energy and environmental justice advocates are encouraged by the Commission’s explicit nod to equitable distribution and reliability. In its order, MPSC promises to hold DTE accountable to its existing commitments on environmental justice. Specifically, DTE has expressed its intention to develop a distribution plan based on data from MiEJScreen: an interactive mapping tool that identifies Michigan communities facing disproportionate impact of environmental hazards. These same communities are more likely to spend higher percentages of their household income on utility bills, while simultaneously experiencing more frequent power outages.

“The Commission has taken an important step in acknowledging the importance of equitable reliability and grid access,” said Will Kenworthy, Midwest Regulatory Director at Vote Solar.  “We look forward to working with the DTE and other stakeholders to further develop and refine methodologies for measuring equity in reliability and grid access and incorporating them into the utilities processes for prioritizing spending and investments.”

“We applaud the Commission for rejecting DTE’s punitive and unprecedented proposed changes to the distributed generation tariff,” said Environmental Law & Policy Center Associate Attorney Daniel Abrams. “The Commission also took an important step in ensuring frontline communities receive equitable treatment as DTE develops its distribution grid. This order sent all Michigan utilities a strong message: Environmental justice communities cannot be ignored in Michigan’s clean energy transition”

The Commission also approved several pilots in its Charging Forward program that will help to make EV’s more accessible to low-income customers, and assist transit agencies in deploying electric buses.  The pilots included point-of-sale rebates of up to $1,500 for income-qualified customers to purchase an electric vehicle, as well as a new “charging as a service” program that will facilitate the installation of charging infrastructure without an upfront cost.  Another pilot includes an innovative “pay as you save” procurement model for five electric transit buses–a first for utilities nationwide.

“We are very excited to see DTE Energy become the first utility in the United States to propose and get approval for an inclusive utility investment program: a pay as you save procurement model for electric transit buses,” said Margarita Parra, Director of Transportation and International Programs, Clean Energy Works. “Through this program, DTE will invest in the battery of an electric bus to reduce their upfront cost to the transit agency. The transit agency agrees to pay a fixed charge on their monthly electric bill that is less than estimated savings versus diesel and only until the utility’s costs are recovered. This pilot program will support scalability and a more equitable approach to transport electrification by other utilities and in other fleet vehicles, such as school buses.”

While MPSC rejected a flawed proposal by DTE to conduct a residential battery pilot program, commissioners signaled interest in convening a technical conference regarding potential residential battery programs in 2023. “We welcome the Commission’s intent to hold a technical conference to facilitate future approval of better designed proposals,” said Guillermo Pereira, Senior Energy Analyst with the Union of Concerned Scientists. “We are glad to see the Commission’s continued interest in residential battery pilots and look forward to continued work toward well-designed, innovative pilot programs with equity and learning at the forefront.”

“DTE’s new Charging Forward EV programs approved by the Commission will go a long way towards making electric vehicles and the infrastructure needed to charge them more accessible to low and moderate income customers,” said Charles Griffith, Climate and Energy Program Director, Ecology Center.  “With EV sales booming and becoming mainstream vehicle choices for Michiganders, it is vital that our utility programs consider equity and that we don’t leave anyone behind. Including a directive to the Energy Affordability and Accessibility Collaborative to come up with a specific definition of equity, the Commission is seeking to ensure that it will have a clear standard of equity to guide its decisions.”

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