14. Why have Michigan's rates gone from below the national average to above the national average over the past several years?

How have environmental capital improvements, deskewing, capital improvements for reliability, delivered fuel price increases, a sluggish economy, renewable energy surcharges, and energy efficiency surcharges impacted Michigan's rates?


1. Michigan's relative rate position moved from below the national average to above the national average in the last few years largely due to the effect of declining natural gas prices on the national average electric rate.

2. Michigan's absolute rate changes over the past few years have been driven largely by capital investments in clean, reliable electricity, and by declining electric load.

- Joint response from DTE Energy and Consumers Energy

Energy Forum Comment

An important factor emerging regarding affordability of electricity is the sudden shift of fixed distribution costs from high to low consumption customers. Unregulated electric cooperatives are rapidly moving fixed costs into the monthly charge and reducing the energy use (per kWh) charge. Great Lakes Energy voted to restructure residential rates on March 22, doubling the monthly charge from 2011 levels, to $32.21 per month, the highest in Michigan. Comments by GLE suggests concern over not be able fully recover all fixed costs through the energy usage charge due to mandated energy optimization programs, a possibility the 10% constraint on customer choice may be lifted and net metering laws. This sudden rate de-skewing assesses fixed costs equally to each customer. The idea that the cost to provide electricity to each customer is the same regardless of usage may be flawed. A recent study by MIT on the future of the power grid concluded that where fixed costs are recovered primarily through monthly customer charges these should be applied differently to customers based on that customers contribution to peak demand. Peak demand load drives network expansion and through the heating of components is responsible for a portion of component maintenance and replacement cost. Forcing customers that live alone, retirees, and those with smaller homes and family size that constrain electricity use due to their budget, to suddenly pay 10% to 30% more to cover an equal share of the distribution cost is creating yet another affordability issue. - Fred, Great Lakes Energy Member 03/25/2013