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Recommendations follow request from Governor Whitmer and build on disciplined approach and recent actions to improve affordability
Today, the Michigan Public Service Commission released a list of concrete actions that the Michigan legislature could take to tackle energy affordability as rising costs continue to put pressure on household budgets. The recommendations come in response to a June letter from Gov. Gretchen Whitmer asking the MPSC to identify ways to lower utility bills for Michiganders, through both legislative reforms that address affordability and grid reliability, and options for new and improved energy assistance programs.
In response, the Commission detailed a set of recommendations, chief among them ending the pattern of annual rate cases, realigning utility incentives to focus more on core reliability and affordability objectives, removing costs that add to customer bills without adding value, and increasing competitive bidding and other opportunities to drive down costs within Michigan’s current regulatory system.
“Affordability is always a top priority of the MPSC, and we’re committed to keeping energy costs reasonable even as we tackle the need to invest in modernizing and strengthening the power grid to improve reliability,” MPSC Chair Dan Scripps said. “We look forward to working with partners in the Legislature, the Whitmer administration and others on ways the state can do more to bring down utility costs. The suggestions the Commission has outlined would help do just that, while also maintaining recent progress toward a more reliable grid.”
Among the MPSC’s recommendations is addressing the utility regulatory and rate recovery model used in Michigan and other states that encourages utilities to favor capital expenditures over less costly approaches, including expanded tree trimming and maximizing the use of existing assets before building new ones.
Specifically, on that issue and others, the Commission recommends:
- Banning Yearly Rate Cases: Move to multi-year rate cases to ensure the next rate hike isn’t filed just days after the last one is approved and help Michiganders plan for more consistent utility bills.
- Prioritizing Customer Outcomes in Rate Cases: Tie utility earnings to cost efficiency and improved performance outcomes for customers.
- Requiring Better Use of the Existing Grid Before Investing More: Compel utilities to make the most of current grid infrastructure that’s already been paid for by customers before investing in expensive upgrades and expansions. This includes requiring transmission utilities to increase use of grid-enhancing technologies, advanced conductors and existing rights-of-way. For utilities that operate the distribution grid, the Commission recommends giving the MPSC the ability to factor utilization metrics into consideration of requests for cost recovery for capital investments.
- Reining In Unnecessary Incentives and Other Costs: Reform structural financing issues by removing unnecessary utility incentives and requiring utilities to use lower-cost financing options for retired power plants.
- Requiring Data Centers to Pay Their Full Costs: Codify the protections the Commission has adopted to ensure data centers cover 100% of the costs they impose on the system, including costs for transmission grid upgrades, to fully shield other customers from bearing any extra costs associated with large-load users.
- Strengthening Grid Planning and Competitive Procurement: Require that utilities filing long-term energy plans optimize between generation and transmission options, while also improving the review of transmission proposals to ensure cost-effectiveness. The Commission also recommends strengthening standardized competitive procurement requirements and unlocking customer opportunities for distributed energy resources and participation in virtual power plants.
- Updating Rate Design to Reflect the Changing Grid: Use new approaches that send better cost signals to reduce overall system costs, lowering expenses paid by all customers.
- Building on Michigan’s nation-leading energy waste reduction (EWR) programs: Michigan’s EWR programs rank among the nation’s best for cost savings and can serve as a framework for other customer-sited energy options, including distributed resources like rooftop solar and home batteries, that lower costs for everyone.
- Expanding Eligibility for Low-Income Assistance Programs: Align eligibility for low-income rates and credits with eligibility for MEAP assistance, which was increased to 60% of the state median income in 2024, which roughly equates to 200% of the federal poverty level. The Commission also recommends similar eligibility expansion for two programs funded by the federal Low-Income Home Energy Assistance Program: the annual Home Heating Credit and State Emergency Relief for households in crisis.
- Expanding Weatherization of Existing Homes: Increase funding for low-income households to weatherize their homes, which can significantly bring down household energy costs, reduce pressure on assistance programs and reduce overall system costs, saving money for all customers. The Commission also recommends a new program that would offer credits for residential home improvements, including weatherization and energy efficiency upgrades.
Additional recommendations and details about the proposals are included in the MPSC’s letter to the Governor.
The MSPC looks forward to building on progress the Commission has made in keeping costs down despite tariffs and inflation driving up utility expenditures on materials, equipment and labor. Between 2020 and 2026, as nationwide inflation rose an estimated 25.3%, the disciplined approach used by the MPSC kept the cumulative impact on residential bills to 4.9% below the overall rate of inflation.
Michigan’s average monthly electric bill in 2024 was $119.31, nearly $23 a month below the national average of $142.16 and lower than the average of neighboring states, according to the U.S. Energy Information Administration. Michigan’s residential electric bills ranked 15th lowest in the country — the state’s best residential bill ranking in a decade. Michiganders paid less per month than customers in Ohio ($135.16) and Indiana ($133.06).
The MPSC serves as an expert, impartial regulator committed to consumer protection, fairness and transparency. For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the MPSC on Facebook, X/Twitter, LinkedIn or Instagram.
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