Contentious DTE membership dues, costing millions, get added to residential electric bills

LANSING — When the Michigan Public Service Commission approved a 6.4% electric rate increase for DTE Energy on Dec. 1, it charged to residential ratepayers millions of dollars in DTE memberships in groups that sponsor getaway conferences for utility commissioners and that critics say promote programs that favor utility profits at customers' expense.

The commission allowed DTE to charge to ratepayers a total of $5.3 million in memberships to groups such as the Edison Electric Institute, despite the fact both the commission and an administrative law judge who presided over the rate case said DTE needed to do a better job of explaining how all of the memberships benefited ratepayers. The commission even approved one membership charge of just over $600,000 that both its own staff and the administrative law judge who heard the rate case recommended it reject.

Instead of rejecting the costs, the three Michigan commissioners, who all attended a California conference sponsored by two of the groups as recently as November, asked DTE to better explain the specific benefits to customers of the memberships in their next application for a rate increase — just as they did when they approved DTE's previous rate hike, including the membership fees, back in 2022.

So ratepayers will continue to pay for utility groups to "network" with the commissioners who adjudicate DTE's rate increase and conduct research that critics say lacks independence from the utility industry.

"To force consumers to have to pay these huge fees for this participation is ... a little obscene," said state Sen. Ed McBroom, R-Waucedah Township, who served on the House Energy Committee before he was elected to the Senate.

In the latest rate case, DTE charged to ratepayers membership costs that include $2.5 million for the Electric Power Research Institute, $1.4 million for the Edison Electric Institute, just over $600,000 for the Low-Carbon Resources Initiative, and about $579,000 for the Nuclear Energy Institute, records show.

A November Free Press report documented a cozy relationship between the MPSC and the utilities it regulates and a lack of transparency in its decision-making process.

One aspect of the coziness is the fact public utility commissions in Michigan and around the country solicit groups such as the Edison Electric Institute — an association of investor-owned utilities such as DTE and Consumers Energy — to sponsor annual and regional meetings of regulators. Late last year, MPSC Commission Chair Dan Scripps signed a letter sent to such groups seeking sponsorships of $1,000 to $15,000 and up to underwrite the annual meeting of the Mid-America Regulatory Conference (MARC), held in Grand Rapids in August. MARC typically turns a profit of close to $100,000 or more from its annual meetings, and uses those proceeds to pay travel, hotel and meals for "commissioner only" conferences held each January in Austin, Texas, or San Antonio, meeting minutes show.

Both the Edison Electric Institute and the Nuclear Energy Institute regularly pay thousands of dollars to sponsor national and regional utility conferences and both helped underwrite the November annual meeting of the National Association of Regulatory Utility Commissioners. The conference was held in La Quinta, California, near Palm Springs, at a resort one online travel publication called "a go-to desert hideaway for Hollywood A-listers." Scripps and Commissioners Katherine Peretick and Alessandra Carreon all attended the LaQuinta conference and all voted to include the cost of DTE's Edison Electric Institute and Nuclear Energy Institute memberships in residents' electric bills.

Jackson Koeppel, a consultant from Highland Park who testified in the DTE rate case on behalf of the community organizations Soulardarity and We Want Green, Too, told the Free Press he's concerned about the groups' sponsorship of such conferences, partly because utility trade groups influence agendas and the makeup of panel discussions at conferences they sponsor, helping to shape the way utility regulators think.

But in his testimony urging an administrative law judge and the MPSC to disallow the membership costs, Koeppel focused on DTE's failure to demonstrate how its memberships in the associations benefit ratepayers, along with evidence that some of the groups work to the detriment of residential consumers.

"It is not reasonable or prudent for the commission to continue approving membership expenses which may be functionally serving as a slush fund for organizations that are not working in the interests of society broadly or DTE ratepayers specifically," Koeppel testified in April.

The Edison Electric Institute commissioned a 2013 study, "Disruptive Challenges," that predicted "distributed generation" technology, such as residential rooftop solar panels, would trigger a "death spiral" for utility companies. The influence of that report, Koeppel said, helped to kill "net metering" in Michigan and elsewhere. Under net metering, which began in Michigan in 2009, residents with rooftop solar were able to sell their excess energy back to the grid at the retail rate.

More: ‘Outrageous’: DTE, Consumers enjoy close relationship with state panel that regulates them

The MPSC ended net metering in 2019, requiring residential customers with solar panels to buy electricity at the retail rate but only be reimbursed for excess power at a lesser rate, significantly reducing the benefit to consumers. The change was the result of laws passed by the Legislature in 2016, after lobbying by DTE and other utilities.

In August, the Sierra Club described the EEI as a "fossil fuel front group" with a "regressive, dirty agenda."

EEI is associated with the Edison Foundation Institute for Electric Innovation, which has DTE Chairman and CEO Jerry Norcia on its management committee, according to its website.

Koeppel noted that EEI's predecessor, the National Electric Light Association, fought public ownership of utilities before it was dissolved in 1933, the same year the EEI was formed.

Sarah Durdaller, a spokeswoman for EEI, said the association and its members "prioritize customer affordability and reliability as we work to deliver resilient clean energy across our economy." Electric utilities are among the most regulated companies in the country and "EEI engages on their behalf with federal and state legislators, regulators, and other policymakers through lobbying, advocacy, and regulatory proceedings, with the goal of providing customers affordable, reliable, and resilient clean energy."

DTE said in its testimony the ways the memberships benefit customers include research, networking and benchmarking.

"Most all businesses large and small belong to professional organizations that share common issues," DTE spokesman Peter Ternes said in a Tuesday email. "DTE belongs to these organizations to share best practices to meet regulations and improve operations to better serve customers."

In his testimony, Koeppel divided DTE's discretionary memberships into three groups. Organizations in one group, where DTE's membership fees total $2.7 million, not only do not benefit ratepayers, in Koeppel's view, but actively work against their interests. In addition to EEI, that group includes the Low-Carbon Resources Initiative, which is focused on natural gas technology, and the Nuclear Energy Institute, he said.

The Nuclear Energy Institute, whose leadership includes DTE, is "straightforward in presenting itself as an industry association designed to promote and advance the use of nuclear energy," and "clearly partisan in its technological focus," while ratepayer interests "are technology-neutral in seeking the lowest costs, lowest health burdens, and highest quality service," Koeppel said in an email.

MPSC staff, as well as the administrative law judge, recommended that the MPSC not allow DTE to charge its $601,470 membership in the Low-Carbon Resources Initiative to ratepayers, because the company "failed to explain the cost impact/benefit to customers." But in its order, the MPSC overruled both its own staff and the judge and allowed the charge, saying the membership is "a valuable collaboration ... aimed at accelerating the development and demonstration of low and zero-carbon energy technologies."

Scripps said in a Tuesday email that although the commission has now asked DTE to come back with improved information about customer benefits of the memberships in two consecutive rate cases, the situations are not the same. This time, Scripps said he was satisfied DTE presented evidence about customer benefits, but some of that evidence came through testimony provided by company officials, rather than being spelled out directly in DTE's exhibit listing the memberships and their respective costs, as he would prefer.

"We asked for more detail in the last case, DTE provided the detail, and on that basis we approved the expenses," Scripps said. "That said, in an effort to further improve the evidentiary record going forward we also ... directed DTE to provide even greater specificity in the future."

Asked whether conference sponsorships by EEI and the Nuclear Energy Institute could influence the MPSC's approval of the membership fees in any way, Scripps said: "Our decisions are based on the record evidence in front of us and the order speaks for itself."

The largest discretionary, or voluntary, membership fee approved was $2.5 million for the Electric Power Research Institute. Koeppel testified that there may be some customer benefit from DTE's membership in that organization, but the onus is on the utility to demonstrate that benefit and he did not feel DTE had done so, beyond saying that it helped the company with research and best practices.

DTE also pays $11.4 million in nondiscretionary memberships, the company said: nearly $8.2 million to the U.S. Nuclear Regulatory Commission; $1.7 million to North American Electric Reliability; and nearly $1.6 million to the Institute of Nuclear Power Operators.

Not all state regulators allow utilities to charge their discretionary memberships to ratepayers.

This summer, Connecticut Gov. Ned Lamont signed a law prohibiting utilities from charging customers for lobbying and other efforts to sway political outcomes, including trade association dues, the CT Mirror reported.

That law followed similar measures in Colorado and Maine, according to the publication.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on X, formerly known as Twitter, @paulegan4.

This article originally appeared on Detroit Free Press: Millions in DTE membership dues get added to Michigan electric bills