Michigan’s Largest Utility Faces Pushback on Debt Sales and Shut-Offs as Company Asks for Rate Hike

What typically is routine procedure — a utility requesting and then receiving approval for a consumer rate increase — has turned unusually contentious for DTE Energy, the largest provider of its kind in Michigan.

Critics are both highlighting the financial impact on Detroit-area consumers and drawing attention to other issues affecting local communities, including widespread outages and the company’s treatment of customers who can’t afford to pay their bills.

A March investigation by ProPublica and Outlier Media revealed that DTE had cut service for nonpayment more than 200,000 times during the pandemic. In an August story, the news organizations showed how DTE had sold off old customer debt, an unusual financial maneuver by a Midwest utility. Reporters found that DTE had received just pennies for every dollar of debt it sold to a collections company owned by a private equity firm. The consequences were severe for thousands of Detroiters who were sued and in some cases had their wages garnished.

Last week, three members of Congress, including Rep. Rashida Tlaib, a Democrat whose district covers much of Detroit, introduced a resolution recognizing access to utility services such as electricity, water and broadband as a human right. That resolution calls for a ban on the sale of household debt, the creation of a federal database to track disconnections, and holding a congressional hearing on utility issues, among other things. Tlaib also testified at a public hearing on the rate increase, joining in a chorus of protest that included dozens of customers.

Following our article last month about debt sales, a spokesperson for Michigan’s office of the attorney general said it is “more closely examining” DTE’s debt sale practice. The spokesperson added that the attorney general plans to raise the issue in negotiations over DTE’s current and future regulatory cases, which are decided by the Michigan Public Service Commission.

In addition, Detroit council member Angela Whitfield Calloway, who represents part of the city’s northwest side, told ProPublica that she intends to ask DTE officials to appear before the City Council to face questions about the company’s shut-offs, outages and debt sales.

“Selling the debt in my opinion is egregious,” said Whitfield Calloway, who, following the March investigation, co-sponsored a resolution calling for DTE to put a one-year pause on electricity and gas shut-offs.

“What’s in it for DTE?” she asked. “You’re causing harm to your customers.”

The DTE rate proposal would bring in an additional $388 million in annual revenue from residential, commercial and industrial customers combined. About 60% of that revenue increase would come from residential customers, who would see rates increase by 8.8%. On Monday, an administrative law judge issued a proposed decision that would cut the revenue increase to $145.7 million. The commission has until Nov. 21 to issue a final order.

Brynn Guster, spokesperson for DTE, said in an email that when the commission approves new rates, it will be the first base rate increase in nearly three years.

In public filings, the company said its rate increase proposal is driven by investments in infrastructure improvements that would prevent power outages and improve worker safety.

Guster also said that the company plans to invest in “a grid of the future that supports our fast-evolving lifestyles, businesses, and economy.”

The utility has defended its shut-off policies; its rate of shut-offs was higher than that of the six other investor-owned electric utility companies in the state, reporters found. A DTE spokesperson told reporters that the company works with customers to arrange an affordable payment plan or find financial assistance through programs for low-income communities.

In response to questions about DTE’s debt sales, Guster previously said the sales lowered the financial burden on other customers and that DTE only sold debt from “closed” accounts, where customers’ utilities had been shut off or residents had moved away from DTE’s service area.

An estimated 200 people attended an August hearing on the proposed rate increase. It’s the first time the Michigan Public Service Commission, which regulates utility rates, has held a public hearing dedicated to taking testimony on a rate increase.

“We understand that people are frustrated,” said Matt Helms, spokesperson for the commission. “This is why the Commission decided to hold the hearing in Detroit, so that commissioners could hear directly from customers concerned about the costs and reliability of their electric service.”

Annie Beaubien of Detroit testified at the hearing about two outages in as many days in July that left her home without air conditioning or fans during 90-degree weather. Getting information from DTE about what was wrong or when power would be restored was difficult, she said.

“It’s just completely ridiculous, the amount of money we pay versus the quality of service we get,” she said in an interview.

Tlaib, meanwhile, took aim at DTE’s shut-off policies at the hearing. “You know what’s outrageous, and what should be the biggest outrage for all of you as members of the commission: In 2020, during the worst of the pandemic, DTE shut off power to customers more than 80,000 times,” she said. Democratic State Reps. Laurie Pohutsky and Yousef Rabhi also testified against the rate increase.

On Aug. 29, just a week after the hearing, severe storms left some 265,000 customers without power. The outages led to closures at 24 Detroit public schools, and some homes were left without power for days. More than 43,000 customers were still without power as of the afternoon of Sept. 2.

Guster said the company apologized to its customers who were affected by the late-August storm and said that the extensive damage from high winds and the complexity of the repairs delayed DTE’s efforts to restore power to some customers. She added that 99% of customers who had experienced outages were reconnected by the evening of Sept. 2.

Siedah Spencer-Ardis, a marriage and family therapist in Detroit, said she went four days without power after the Aug. 29 outage — a situation she described as “hell.”

Her two ***** missed three days of school. She and other therapists had to juggle appointments as outages affected both them and their clients. She said her family had to discard food from two refrigerators in her six-member household. And this isn’t the first time: She estimated that she’d lost groceries during DTE power outages four times over the last three years.

“This is like a recurring thing where we lose power,” she said. “They need to do better.”