Michigan Public Service Commission Approves $276.6 Million Consumers Energy Rate Hike To Fund Grid Reliability Improvements

MPSC Approves Rate Increase Starting May 1

LANSING — The Michigan Public Service Commission voted 3-0 on Friday to approve a $276.6 million rate increase for Consumers Energy, allowing the utility to collect additional revenue from its electricity customers to fund continued infrastructure upgrades and reliability improvements.

The new rates will take effect on May 1, 2026, and will add an average of $6.46 to monthly bills for residential customers using 500 kilowatt-hours per month, representing an 8.9% increase according to the commission.

Consumers Energy serves approximately 1.9 million electricity customers and 1.8 million natural gas customers primarily in Michigan's Lower Peninsula.

Reliability Investments

The approved rate increase will support the utility's Reliability Roadmap, a multiyear plan unveiled in 2023 aimed at improving electric service across the utility's territory. The money will fund:

• Distribution upgrades to enhance reliability and reduce outages
• Tree trimming and vegetation management programs
• Burying power lines in urban areas to protect them from severe weather
• System protection and resiliency improvements

Greg Salisbury, vice president of electric distribution at Consumers Energy, stated during a March 25 news media call that the investments are "spending effort and investment across our territory, our historic urban areas, to all of our rural areas, to make the system stronger and secure the grid."

The utility's average customer experienced 21 fewer power outage minutes in 2024 compared to 2023. More than 93% of customers experiencing power outages had their power restored in less than 24 hours in 2024 under all weather conditions, up from 87% in 2023.

Michigan has reduced the average number of outage minutes per customer by nearly an hour — 52.6 minutes — between 2019 and 2024, a greater reduction than any other state.

Consumer Advocate Pushes for Lower Increase

Michigan Attorney General Dana Nessel intervened in the Consumers Energy rate case to argue for a significantly lower rate increase. Nessel's office had advocated limiting the increase to just 3.5%, which would have cut the company's request by nearly 65%.

"How many times are Michigan families expected to reach deeper into their pockets to bankroll record profits and shareholder dividends for DTE and Consumers Energy's Wall Street investors, while reliability and affordability remain out of reach?" Nessel said last month after DTE Energy informed the MPSC it planned on filing a new rate increase case.

The MPSC ultimately approved a rate increase $160 million below what Consumers Energy originally requested. The utility had asked for a $436 million rate increase plus an additional $24.3 million surcharge, representing an overall 13% increase.

Nessel noted her office has helped Michigan consumers save more than $4.1 billion by intervening in utility cases since she took office.

Part of Broader Rate Increase Pattern

This latest approval continues a pattern of repeated rate increases for Consumers Energy and its competitors. Last year, the MPSC approved a $154 million electric rate hike for Consumers Energy. Since 2020, regulators have approved nearly $800 million in total annual revenue increases for the company.

Several other utility rate cases are currently open before the MPSC, including:

• Consumers Energy natural gas rate hike request
• DTE Energy natural gas rate hike request
• SEMCO Energy Gas Company gas rate hike request
• Upper Peninsula Power Company electric rate hike request

DTE Energy has also announced its intent to file another electric rate hike request in April.

Kelly Hall, senior vice president of regulatory and legal affairs for Consumers Energy, stated March 25 the planned rate case hasn't been fully developed yet and it's unclear how much the company will ask to increase rates by. Consumers last received an electric rate increase in March 2025, when the MPSC signed off on a $153.8 million hike. The typical rate case takes about a year to complete, and Consumers' next rate case wouldn't take effect until sometime in 2027 if approved.

MPSC Maintains Utility Economics

The MPSC maintained Consumers Energy's current return on common equity of 9.9% and a capital structure of 50% equity and 50% debt. The utility had sought a return on equity of 10.25% and a capital structure of 50.75% equity and 49.25% debt.

Katherine Peretick, one of three MPSC members, emphasized during the decision that reliability and affordability are not competing objectives. "They are fundamentally linked, investments that are well-targeted, data-driven and cost-effective will reduce outages, minimize the need for emergency and reactive spending and, ultimately, lower costs for customers over time," Peretick said.

The Commission's Prudence Review

The Commission approved the company's Repetitive Outages Low-Voltage Distribution program, which will identify locations on its grid where customers experience frequent outages and target improvements and repairs to trouble spots.

The approval also cut out projects that were not fully supported or shown to be prudent investments, removing almost 40% of the company's original proposed request. The Commission authorized Consumers to raise rates by $276,607,000, as well as $21.7 million in deferral costs for operations and maintenance associated with ramping up efforts to trim trees, and $14.6 million for cloud computing costs associated with the company's SAP S4/HANA information technology project.

The deferrals approved in this case spread the recovery of larger operations and maintenance costs over time, reducing the immediate rate impact for customers.

Next Rate Case Coming Soon

Under state law, utilities are required to inform the MPSC ahead of time when they plan on seeking a rate increase. Consumers Energy must file its next rate case no later than April 3, 2026.

The Commission maintained the company's current return on common equity of 9.9% and a capital structure of 50% equity and 50% debt. The utility had sought a return on equity of 10.25% and a capital structure of 50.75% equity and 49.25% debt.

Katherine Peretick, one of three MPSC members, emphasized during the decision that reliability and affordability are not competing objectives. "They are fundamentally linked, investments that are well-targeted, data-driven and cost-effective will reduce outages, minimize the need for emergency and reactive spending and, ultimately, lower costs for customers over time," Peretick said.

Customer Assistance Available

The MPSC maintains a customer assistance hotline at 800-292-9555 for consumers with questions about the approved rate increase and the utility's reliability improvements.

The Commission's focus continues to be on improving reliability while responsibly managing customer costs. The approved investments represent the Commission's ongoing evaluation of utility infrastructure needs and their impact on ratepayers.