Several factors are putting pressure on energy costs across the country and in Michigan.
Prices for almost everything have gone up over the last several years, and utilities face the same higher costs for equipment, materials, vehicles, and labor.
Line graph showing increase in 12-month Percent Change in the Bureau of Labor Statistics Consumer Price Index 2010-2026. Key items like transformers and utility poles have seen unusually steep price increases due to supply shortages, rising material costs, and global demand. These are the components needed to maintain and upgrade the grid.
Line graph showing the Producer Price Index: Power and Distribution Transformer price increases from January 2020-January 2023. The price utilities pay to ensure there is enough electricity to meet demand—called “capacity”—has increased sharply in regional energy markets.
Line graph showing PJM Base Residual Auction RTO Clearing Prices increasing from 2007 to 2026. Shifts in tariffs, tax credits, forced plant operation, and federal grants have increased the cost of grid projects and energy generation. Utilities must adjust their plans when equipment becomes more expensive, operating plans are altered, or planned federal support is withdrawn.
Natural gas prices fluctuate based on weather, supply, and global events. Since natural gas is used for both home heating and electricity generation, spikes in gas prices can affect energy bills.
Even with these pressures, Michigan’s regulatory process has helped keep residential bill increases below the overall rate of inflation in recent years.
Michigan has made meaningful progress in improving electric reliability over the past several years, but many parts of the grid are still aging and need continued investment.
A large portion of the state’s electric system was built decades ago, and older equipment is more likely to fail—especially as demand grows from things like electric vehicles, heat pumps, and modern home appliances.
According to the MPSC’s independent, third-party Utility Distribution Audit (Case No. U-21305), about one-third of DTE’s distribution system was built before 1965 and can’t support today’s capacity needs from increased electrical use, which is why DTE is planning major upgrades to harden older 4.8 kV circuits and convert them to a modern 13.2 kV system. These upgrades improve safety, reliability, and the grid’s ability to meet future demand.
Consumers Energy faces similar challenges. Roughly 30% of its underground distribution cables were installed before 1990, and cables from before the mid-1980s tend to have higher failure rates. In addition, many of Consumers’ service transformers are aging: about 5% are more than 50 years old, one third are over 30 years old, and more than half are over 20 years old.
Replacing outdated equipment, strengthening vulnerable parts of the grid, and upgrading older circuits all help reduce outage frequency and duration over time.
