How Rates are Set
Rates Video
How are rates determined?
 

The rate setting process

From your neighborhood grocery to your local gas station, from the coffee shop to the plumber, the businesses you use are free to change the price of their products or services whenever demand or market conditions dictate. 

Detroit Edison and MichCon must operate differently.  Each is a regulated utility company, and that means their rates are controlled through the Michigan Public Service Commission.

The Michigan Public Service Commission (MPSC) has a number of responsibilities:

  • Establishing fair and reasonable rates for utility services
  • Ensuring fair terms and conditions of service for utility customers throughout Michigan
  • Preserving the financial integrity of Michigan's utility companies
  • Ensuring that utilities provide adequate and reliable sources of energy- and safe and reliable distribution of that energy- to their customers

While the way utility prices are set differs from the way other businesses set their prices, there is one common issue we share – the cost of doing business.  When the costs of doing business rise, Detroit Edison and MichCon must  obtain MPSC approval -- through a formal legal proceeding called a Rate Case -- to recover those additional costs.

The utility seeking rate relief in a Rate Case must provide detailed facts and figures about how much revenue it needs in order to provide quality service at a reasonable rate. The Commission also seeks input from consumer and industry groups, the State's Attorney General and other interested parties.   All of the evidence presented by the all parties is thoroughly reviewed by the MPSC before it issues a final order setting the new rates.  A Rate Case may take up to 12 months to review before the MPSC issues its final decision.

 

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What does a rate cover?

From day-to-day delivery of energy to investment for the future, the rates you pay for electricity and natural gas cover the costs to run our business.  This includes many aspects of your service to you, such as the cost to:

  • read meters
  • respond to service calls
  • maintain and improve electrical circuits and natural gas pipelines  
  • billing
  • repair natural gas leaks
  • install new poles, wires and pipelines 
  • repair damages caused by storms, auto accidents and excavators   
  • make environmentally-friendly improvements to power plants and gas processing facilities
  • offset fuel costs for natural gas, coal, nuclear and renewable energy sources used for generating electricity

As these costs rise, we may need to borrow money.  This is an essential aspect of our business, because we get paid after you use our product and services, not before.

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Factors that impact utility prices

  • Energy costs

    Currently, Detroit Edison uses low-sulfur coal and nuclear power to generate most of the electricity our customers use.

    Coal, natural gas and oil are commodities like orange juice and gold. As the cost of coal, natural gas and oil change, so does our cost to produce electricity and provide natural gas service.

  • Weather conditions

    Weather impacts the cost of energy.  Extreme or lengthy winters raise demand. Severe weather conditions, like hurricanes, diminish natural gas production and impact supply. Extreme heat can increase the demand for electricity for cooling.

    Weather-related problems are the main cause of electrical power outages and repair expenses, and these impact your bill.

  • Maintenance of our system

    To ensure safe and reliable service for our customers, we must work year round to maintain, repair and improve our facilities.

    This includes numerous power plants and natural gas facilities, which must be maintained and equipped with emission control equipment. 

    We also serve 2.2 million electrical customers spread across a 7,600 square miles area, which includes one million utility poles and 44,000 miles of power lines. Additionally, we serve 1.2 million natural gas customers across the lower and upper peninsula, delivering natural gas to a 14,700 mile service area.

  • Time and day of usage

    Did you know that the actual cost to generate electricity actually varies minute by minute depending on demand?   The costs for both generation and delivery of electricity go up in periods of very high demand, especially if that high usage occurs during only a small proportion of the year, for example in the summer.   

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What’s DTE Energy doing to control costs?

We understand that electricity and natural gas are a necessary part of our modern lifestyles.  We're committed to doing all we can to keep energy costs down now and in the future.  

One way we do this is through a relentless commitment to excellence -- by always striving to be better tomorrow than we were today.  Our employees strive to reduce waste, streamline processes and work as efficiently as possible. Last year, we were able to generate $130 million in cost savings.    

Another way we reduce expenses is by controlling our own fuel costs.  The price of natural gas is impacted by supply and demand and by weather.   Because MichCon has the advantage of owning vast storage fields, we can purchase large quantities of natural gas at the lowest possible price, and store this gas to use later. This practice helps cushion our customers from the ups and downs of seasonal pricing.

We’re also using technology to become more efficient. For example, we’re partnering with the Department of Energy to install new high-tech electrical and natural gas meters that will eliminate manual meter reading.  The new meters will also allow us to pinpoint individual electrical outages – something we cannot do today. And, they'll give us the ability to connect electric meters remotely, reducing the time it takes to establish new service. Learn more about the SmartCurrents program. 

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What can I do to control my costs?

Start at dteenergy.com/home. You’re just a click away from tools and advice to help you.

  • Manage your bill

    We offer convenient, billing programs such as our eBill and Automatic Payment plans.  You can also take advantage of BudgetWise Billing, a program that takes the seasonal ups and downs out of energy bill payment by allowing customers to pay the same amount monthly.  Some of these options can be combined to make it even easier to manage your account.  Low income and special needs customers may also qualify for payment assistance.  

  • Choose the best rate option

    We also offer a number of different rate options. Use the Rate Selector to learn which rate options may benefit you. You may also call us at 800.477.4747 to speak with one of our representatives.

    • Save money, Save energy

      Make energy choices that are right for today's economy and for your household budget. Use the interactive MyEnergy Analyzer tool to learn more about your energy use.  Find rebates and advice on controlling your energy use our Save Energy Web pages.

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