Energy Affordability in Michigan: What You Need to Know
Rate Case Process

Why do utilities request rate increases, and how does the MPSC review them?

A regulated utility cannot increase its rates without the Michigan Public Service Commission’s approval. Utilities sometimes request rate increases when the cost of providing safe and reliable service goes up.

These costs can include things like: 

• Replacing aging equipment,
• Responding to storms,
• Maintaining the grid,
• Buying fuel,
• Meeting new safety standards, and
• Investing in upgrades that reduce outages. 

Utilities must explain why they need more money and how they plan to use it.

When a utility asks for a rate increase, the Commission reviews the request—but the law does not allow the Commission to simply reject it outright.

State law (MCL 460.6a) requires the Commission to follow a formal, evidence-based process that includes public notice, opportunities for people to participate, and a full hearing. As part of this review, the Commission must decide whether the utility’s costs are reasonable, prudent, and backed up by sufficient evidence.

The Commission also cannot block a request by refusing to act on an application. If the Commission does not issue a final decision within the timeline set by law, the rate increase is automatically approved.

As part of its review, the Commission’s process includes:

• Examining whether the utility’s costs are necessary, reasonable, and prudent;
• Requiring the utility to provide documentation and evidence to support every request;
• Allowing experts, consumer advocates, businesses, and other interested persons to participate; and
• Removing or reducing costs that are not justified.

At the end of the process, the Commission issues an order setting the utility’s rates. The utility may receive less than it requested, and certain requested costs may be denied entirely. This process ensures customers only pay for expenses that are proven, reasonable, and directly tied to maintaining and improving service—while also ensuring the Commission’s decisions comply with state law.