When it comes to electric prices in Michigan, misconceptions often get in the way of the facts. For example, did you know that over the last three years, Michigan was the only state in the Great Lakes region to reduce its electric prices? Or that Michigan’s industrial prices are nearly 10 percent lower than Wisconsin’s?
Perhaps even more important than what the prices are is how that money is used — and how everyone in Michigan ultimately benefits from what we invest in our electric system.
Think about it. A lot goes into producing energy. Michigan produces a complex energy mix from a variety of sources, including natural gas, wind, hydro, and nuclear, as well as coal. It takes specialized equipment, technology, and skill to extract energy from these resources. Once produced, this energy has to travel safely and efficiently through circuits and utility poles until it reaches the right voltage as it enters your home. Electric prices help pay for not just the charge emitting from your outlet, but for the entire process from production to transmission to consumption.
WHAT’S PAID HERE, STAYS HERE
Payments going to Michigan energy providers are reinvested in Michigan. Just like our bridges and roads, our energy infrastructure needs to be updated and repaired. DTE Energy must maintain substations, transformers, and utility poles; trim back trees compromising distribution wires; and incorporate new technology to make our grid hardier and stronger for the long term. Revenues generated from customer bills pay for grid improvements that translate into new construction jobs, contracts with local suppliers, and lease payments to landowners.
Michigan-based energy providers also support our communities through tax revenue. These funds go to essential services such as education, healthcare, emergency services and more.
A REASONABLE INCREASE
Reasonable price increases produce great benefits for average Michiganders. How? Increased revenue improves our energy infrastructure, ensuring we can maintain a safe, reliable and affordable energy future.
Will customers see their electric prices increase somewhat over the next few years? Yes, given that our state is making dramatic—and crucial—changes in how our electricity is generated and delivered. Because Michigan is a regulated market, prices are not determined by utility companies, but instead are decided by an independent state government agency, the Michigan Public Service Commission (MPSC). DTE and other energy companies make recommendations for price changes, then must demonstrate just how the increased revenues will be used. The MPSC ultimately decides what increases are reasonable for industrial, residential and business consumers.
Look at how Michigan’s prices compare to our neighboring states over the last three years: Industrial rates in Michigan dropped 3 percent while rates went up in Ohio (2.9 percent), Illinois (2.3 percent), Indiana (1.6 percent), and Wisconsin (1.5 percent). For more details on electric pricing for Michigan businesses, visit our website.
Same story for retail prices in the same span: down in Michigan (-0.1 percent); up in Illinois (3.6 percent), Ohio (1.9 percent), Indiana (1.6 percent), and Wisconsin (1.3 percent). More details on electric pricing for our residential customers also is available on our website.
For more information, be sure to check out our blog posts on what they are, how they’re used, and who sets them. The best news is that electric prices ultimately benefit everyone in Michigan by improving our electric grid and securing our energy future.
A version of this post first appeared on the Alliance for Michigan Power blog.