There were a number of heavy thunderstorms in late July and early-to-mid August. Almost a million Michiganders lost electricity in the worst of the storms. For some, getting the lights back on took a week. WEMU's David Fair and Michigan League of Conservation Voters executive director Lisa Wozniak wanted to know what regulators and citizens can do to create a more secure future. For answers, they turned to Bob Nelson, board president of the nonprofit group, Citizens Utility Board of Michigan.
Lisa’s career spans over two decades of environmental and conservation advocacy in the political arena. She is a nationally- recognized expert in non-profit growth and management and a leader in Great Lakes protections. Lisa is a three-time graduate from the University of Michigan, with a Bachelors Degree and two ensuing Masters Degrees in Social Work and Education.
Lisa serves a co-host and content partner in 89.1 WEMU's '1st Friday Focus on the Environment.'
David Fair: [00:00:00] This is 89 one WEMU, and I'd like to ask a question. How many of you have experienced power outages of late while the storms of August 10th through the 12th put about a million Michigan residents in the dark and in the heat? I'm David Fair, and I'd like to welcome you to First Friday Focus on the Environment. The first Friday of each month, we get together with the executive director of the Michigan League of Conservation Voters, Lisa Wozniak, who's co-host and back for the September edition. Did you lose power, Lisa?
Lisa Wozniak: [00:00:27] You know, David, I did not. But the rest of my neighborhood, with the exception of my block, sure did. And I even got a call, an automated call from DTE, apologizing for my power outage. So, I was lucky somehow. But with power grid security so fresh in all of our minds, we decided to invite Bob Nelson to be our guest today. And Bob is the president of the board of directors for the Citizens Utility Board of Michigan or CUB of Michigan for short. It's a nonprofit that works to represent the interests of residential energy customers all across the state.
David Fair: [00:01:01] Well, welcome to the show, Bob. We appreciate it.
Bob Nelson: [00:01:03] I'm happy to be here.
Lisa Wozniak: [00:01:05] Well, Bob, it isn't just that significant outages occur. It's also that it sometimes takes a week or more to get electricity restored. Groups like CUB work to track all of this and provide the public with information and insights. How central are outages and restoration issues to what the Citizens Utility Board does?
Bob Nelson: [00:01:25] Oh, it's very central to what we do. We have reports that we issue every year. Compare Michigan to other states along the outages last and how long it takes to restore power after an average American ranks very poorly on both counts.
Lisa Wozniak: [00:01:42] And what else does CUB track?
Bob Nelson: [00:01:44] Well, we track, for example, affordability, what the rate is being charged for electric use throughout the United States. And, again, Michigan is not real high there, but it's about the middle of the pack. We also track environmental concerns such as NOx and SOx. How much of those are emitted by each utility?
David Fair: [00:02:10] Bob, you just referenced a report that your organization issued in 2020 that paints a kind of clear picture of how our utility companies stack up against others in the Midwest and across the country. Can you speak to how Michigan utilities do compare to neighboring states when it comes to grid reliability?
Bob Nelson: [00:02:25] Yes, we don't stack up very well at all. If you look at some of the key metrics, duration of outages, and the length of time it takes to restore power after an outage, we don't stack up very well at all. In fact, we're second worst in the country when it comes to restoring power after an outage. We do need to improve this considerably. And we have some ideas for holding the utilities accountable by making sure that if they don't meet a metric, they get penalized.
Lisa Wozniak: [00:02:58] And an important part of all of this, which you've mentioned, is cost. Our energy costs just seem to increase every year. When the utilities go to the Public Service Commission, which you're very familiar with--the state body that regulates our energy--the utilities make requests for rate increases, usually in the hundreds of millions of dollars. Can you talk a little bit about how we stack up in terms of cost compared to others?
Bob Nelson: [00:03:22] Yes, yes. So, again, we don't stack up very well. They're either one of the highest in the Midwest in terms of what is charged ratepayers, both DTE and Consumers Energy. The thing that bothers us the most, though, is that we will get those credits after an outage if they're out for more than 16 hours, for example.
David Fair: [00:03:43] For 25 dollars.
Bob Nelson: [00:03:46] Yes, twenty five dollars. But those bill credits are passed on in terms of higher rates. And we think that's not a good system at all.
David Fair: [00:03:54] 89 one WEMU's First Friday Focus on the Environment continues. My co-host is Lisa Wozniak from the Michigan League of Conservation Voters. Our guest is Bob Nelson, the president of the Citizens Utility Board in Michigan. So, I want to know how the sausage is made, Bob. You served as a member of the Michigan Public Service Commission. And as Lisa mentioned, DTE and Consumers come in with massive rate requests. Looking back to May of 2020, the Michigan Public Service Commission approved an electricity rate increase of 188 million dollars to DTE's residential customers, and that was actually far less than what it asked for. DTE this year then reported first quarter earnings of 397 million dollars. So what exactly is being considered when the NPSC grants a rate increase?
Bob Nelson: [00:04:41] Well, they look at a number of factors. They look at rate of return or the rate of profit that the utility should earn. They look at the expenditures that each utility has over the past year. And they look at a number of factors that go into what the utility does on a day-to day-basis. That's an ongoing problem. Our concern is that the gap between industrial rates and residential rates is growing almost exponentially in the last 10 years, so that residential rate payers bear the brunt of most rate increases.
David Fair: [00:05:19] During the last major outage in this area, bob, I had the opportunity to talk with a DTE representative, and the messaging is similar to what's been throughout other media outlets. Trees. They're to blame when strong winds come through that more needs to be invested in tree trimming. So, DTE doesn't have to spend a week or more repairing the 3,000 power lines that were knocked down. What I don't have an answer to is why, for the most part, we are still reliant on what is essentially World War Two era technology for our power lines and poles when they are making so much profit. Where are Michigan utilities lacking in creating greater reliability?
Bob Nelson: [00:05:53] Yeah, that's a very good point. I think the utilities could do a lot more in terms of advancing this new technology, so they can track where the outages are occurring, track exactly when the storm is coming. They don't have, right now, a very good system for doing that. And the other issue there is that utilities, for the most part, don't realize that these outages occur on a constant basis over time, and they should be prepared for outages occurring in that constant basis.
Lisa Wozniak: [00:06:29] So, Bob, my question is, given the profitability of the utilities in Michigan, which you've outlined, what can be done to ensure that these profits are going toward actual improvements of service?
Bob Nelson: [00:06:41] Yes, that's a good point. The Public Service Commission should make sure when the approval rate increase, they should set aside a certain block of that increase toward improvements and make sure they keep it in a lockbox. And if the utility doesn't spend it on that, they get penalized. There are a number of ways we could do that. But the commission should make sure that the utilities spend the money to improve their systems. And, right now, that's not happening.
Lisa Wozniak: [00:07:12] What can customers of DTE and Consumers Energy customers do, Bob, to make their voices heard in this process? It feels so sort of remote and people feel sort of at a loss of, like, how do we actually make our voices heard and make change in making sure there are improvements to the grid and that electricity is more affordable?
Bob Nelson: [00:07:32] Well, one thing they can do is to join CUB. We are the voice for residential ratepayers in the state. And so, if a customer wants to join CUB, there's an easy application. It doesn't cost anything. Just go online--Citizens Utility Board of Michigan--and sign up. But the other thing they could do is show up at these public hearings. The commission has public hearings before every rate case, and it's important to show up and have your voice heard.
David Fair: [00:08:00] You were on the commission at one point and--
Bob Nelson: [00:08:03] Right.
David Fair: [00:08:03] You know, people often feel powerless and even when showing up that their voices aren't being heard. So, how much consideration is given to those who show up and want to protest such high rate increases?
Bob Nelson: [00:08:15] Well, that's a good point. And the commission is bound by the statute, and they can only look at things that are on the record, for example. And if you show up at a public hearing, your voice is not necessarily on the record because it hasn't been heard before a law judge, etc. So, it's important to show up, so the commission gets a feeling for how many customers are upset about a rate increase. But, at the same time, it's very difficult for the commission to take that into account. So, I think the better opportunity to join CUB, and then we will go to these rate cases, intervene with attorneys, and put on a case and try to reduce the rate increase as much as possible.
David Fair: [00:08:57] There are other alternatives. There are elected officials here in Ann Arbor that think the better solution is to create a municipally-run, public electric utility all its own. Other communities have done this in Michigan and other states. What are the pros and cons of going in that direction and away from the major utilities like DTE and Consumers Energy?
Bob Nelson: [00:09:15] Yeah, that's a very good point. And there are pros and cons. You know, one of the pros is to have an independent system that's not based on profit. The utility can spend their money improving their systems and providing service to the customers. The con is that you've got a current system where the utility owns the power poles, owns the wires, and they will have to turn those over to the municipal system and charge them exorbitant rates. So, there are pros and cons for either way you go with that.
David Fair: [00:09:52] Well, there's a lot to consider as we move forward. And I thank you for your time today, and perhaps we'll have an opportunity to explore these issues further down the line.
Bob Nelson: [00:10:00] OK, well, thank you very much for having me.
David Fair: [00:10:02] That is Bob Nelson, president of the board of directors for the Citizens Utility Board of Michigan. And Lisa Wozniak is executive director of the Michigan League of Conservation Voters and my co-host for WEMU's First Friday Focus on the Environment. Lisa, great topic, great guest. And we'll see you again in October.
Lisa Wozniak: [00:10:20] Yes, a big thanks to you and Bob, and it's always a pleasure. I look forward to talking next month.
David Fair: [00:10:25] I'm David Fair, and this is 891 WEMU FM and WEMU HD One Ypsilanti.
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