MPSC Approves $276.6 Million Consumers Energy Rate Increase to Fund Grid Reliability Upgrades

# MPSC Approves $276.6 Million Consumers Energy Rate Increase to Fund Grid Reliability Upgrades

By Michigan Capitol

The Michigan Public Service Commission on Friday approved a $276.6 million rate increase for Consumers Energy Co. electric customers, a decision that will add an average of $6.46 to monthly residential bills starting May 1, 2026.

The commission voted 3-0 to approve the increase, which the MPSC said will support the utility's continued improvements in making its power grid more reliable, with fewer power outage minutes per customer and faster service restoration times.

What the Rate Increase Means for Customers

According to the commission, a typical residential customer using 500 kilowatt-hours per month will see a 6.1 percent increase in their monthly bill. The new rates will take effect May 1, 2026.

This approval follows a $153.8 million rate increase the MPSC signed off on for Consumers Energy electric customers in March 2025, making this the second consecutive rate hike for the Jackson-based utility in just over a year.

The Approved Investments

The $276.6 million rate increase will go toward infrastructure upgrades that Consumers officials say will help reduce outages and speed up restoration times. The approved investments include:

• $226 million for the utility's Lines Reliability Low-Voltage Distribution program, which supports improvements to distribution reliability and targets upgrades to reduce interruptions
• $21.7 million in deferral costs for operations and maintenance associated with ramping up efforts to trim trees
• $14.6 million for cloud computing costs associated with the company's SAP S4/HANA information technology project

The commission also approved Consumers Energy'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 those trouble spots.

MPSC Maintains Lower Rate Hike Than Requested

Consumers Energy had asked the MPSC for a $423 million increase to its electric rates. The approved $276.6 million represents about 65 percent of the company's request.

"The MPSC cut out projects that were not fully supported or shown to be prudent investments, removing almost 40 percent of the company's original proposed request," according to MPSC documents.

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

Consumer and Public Pushback

The approval has drawn criticism from consumer advocacy groups and the Michigan Attorney General's office.

Amy Bandyk, executive director of the Citizens Utility Board of Michigan, said in a statement Friday that the organization is still reviewing the order.

"It is good that the MPSC didn't grant Consumers Energy the full extent of its rate hike request, but still, the 6.1 percent residential rate increase approved today is much higher than the rate of inflation, which was 2.8 percent in 2025 according to the Congressional Budget Office," Bandyk said.

"That means the MPSC's order today will continue to worsen the energy affordability crisis facing Michiganders."

CUB pushed back on Consumers Energy's claims it needs to hike rates on its customers to ensure reliability.

"That doesn't hold up for at least two reasons," Bandyk wrote. "First, a big portion of the rate increase approved today has nothing to do with reliability. The MPSC has let down ratepayers by allowing Consumers Energy to collect more profit for its shareholders than the national average."

Bandyk noted that the MPSC went against its own staff, which recommended 9.75 percent for return on equity, when the commission approved a 9.9 percent rate instead.

"The national average ROE for electric utilities in the U.S. is around 9.7 percent," Bandyk said. "CUB's expert testimony recommended 9.2 percent ROE, and doing so would have saved ratepayers over $41 million per year compared to what the MPSC approved today."

Attorney General's Concerns

Michigan Attorney General Dana Nessel, whose office intervened in the Consumers case to argue for a lower rate hike, has been critical of repeated rate cases from the state's largest utilities.

"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 informed the MPSC it planned to file a new rate increase case.

The MPSC is the three-member body that considers rate increase requests from utility companies. Both Consumers Energy and DTE Energy serve Michigan customers and have faced scrutiny over reliability performance compared to their regional peers.

Consumers Energy's Defense

Consumers Energy officials defend the rate increase as necessary for grid improvements.

"We're 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," Greg Salisbury, vice president of electric distribution for Consumers Energy, said during a March 25 news media call.

Consumers officials added that the investments from the latest rate increase are part of the company's Reliability Roadmap, a multiyear plan unveiled in 2023 aimed at improving electric service across its territory.

Consumers Energy serves about 1.8 million electric customers, mainly in Michigan's Lower Peninsula.

"We know the cost of everything is going up, from energy to health care to groceries," Kelly Hall, senior vice president of regulatory and legal affairs for Consumers Energy, said in a statement. "That's why we ensure that we're making smart, cost-effective upgrades to secure the grid, fix problems before they happen, and improve reliability for our customers."

The utility says it intends to double this decade the number of miles where it trims trees, bury more power lines to protect them from storms and threats that cause outages, install poles that withstand stronger winds and storms, add technology that instantly reacts to interruptions, and secure the grid against physical and cyber threats.

Consumers Energy said Friday that about 75 cents of each customer dollar goes directly back into securing the grid.

Michigan's Progress on Grid Reliability

The Consumers improvements come as 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.

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

The commission's focus is on improving reliability while responsibly managing customer costs.

"I want to emphasize reliability and affordability are not competing objectives," Katherine Peretick, one of three MPSC members, said. "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."

Next Steps

Under state law, utilities are required to inform the MPSC ahead of time when they plan to seek a rate increase. Consumers Energy's next rate case, which the utility would file April 3, would not take effect until some time in 2027 if approved. The typical rate case takes about a year to complete.

The Citizens Utility Board of Michigan has said it will continue to monitor the situation and advocate for ratepayers in future cases.

The commission's order requires Consumers Energy to prove the money was spent on approved projects in a future reconciliation case, with any unspent funds potentially subject to being refunded to customers.