DTE rate hikes include executive perks and lobbying costs – Planet Detroit

A report released Wednesday reveals how DTE and other utilities are trying to recoup millions through rate increases for executive perks, lobbying and advertising aimed at generating goodwill for the companies

Karlee Weinmann and Itai Vardi, who wrote the report for the Energy and Policy Institute, an industry watchdog group, argue that this spending “does not benefit customers and often runs counter to their interests.” They add that the current system places a heavy burden on advocates and officials who have to look for inappropriate spending hidden in rate hike requests.

That includes what they call “extravagant spending,” such as DTE’s attempt to charge customers $236,000 for private jet travel in recent rate hike requests, which Michigan Attorney General Dana Nessel said. described as “downright insulting to customers”.

Other improper expenses passed along to ratepayers may be harder to detect, including employee salaries and contributions to trade organizations that support companies’ lobbying efforts.

Meanwhile, bills for DTE residential customers have risen significantly in recent years: Those using 1,000 kilowatt hours per month pay 18.93 cents per kWh, up from 14.68 cents in 2014, a 29% increase.

The EPI report comes as Michigan lawmakers and labor unions are pushing for the Taking Back Our Power Act, which would bar monopolistic utilities and companies seeking government contracts from making political donations.

Although blocking political donations from utilities wouldn’t stop lobbying, Rep. Dylan Wegena (D-Garden City), who sponsored the bills, said it could help curb the utilities’ influence.

“One of the things that makes a lobbying effort successful is the amount of money that supports it,” he said.

This spending has been huge in recent election cycles, with a DTE-affiliated nonprofit donating $2 million to Michigan Democrats in 2022.

The bills did not pass out of committee and Wegena doubted the law would be implemented during the Legislature’s lame-duck period. He said the Legislature will likely launch a petition campaign to get the issue on the ballot and let Michigan voters decide whether to block political spending on utilities.

DTE representatives declined to comment on the EPI report. However, on its website, the company states that its political activity is aimed at “supporting public policies that advance its commitment to sustainable, reliable, affordable and secure energy.”

The “double whammy” of utility lobbying

Advocates say that without strict disclosure rules, ratepayers may end up paying for utilities’ influence efforts, either by covering the salaries of lobbyists or paying dues to organizations that represent corporate interests.

“This activity represents a double cost to ratepayers: First, they pay for the time employees spend advocating for their bills, and then they are forced to deal with policies and regulatory outcomes that may not align with theirs interests coincide (and possibly incur costs). them more),” write Weinmann and Vardi.

DTE’s 2023 electric rate increase included $2.5 million for membership in the Edison Electric Institute, which has advocated against rooftop solar installations. And the 2023 gas tariff lawsuit included $730,000 for membership in the American Gas Association, an organization that critics say is pushing to weaken energy efficiency rules and downplay the climate and health risks of natural gas.

DTE spokeswoman Jill M. Wilmot defended the company’s participation in the AGA in a statement to Planet Detroit in May: “DTE works with these organizations to share best practices, assist with regulatory compliance and improve operations, to better serve our customers.”

She said the company excluded $36,000 from its gas pricing process that benefited the AGA’s lobbying efforts. But Amy Bandyk, executive director of the Citizens Utility Board of Michigan, said “it’s difficult to verify exactly how much of the contributions are political” because even nonpolitical spending could indirectly support lobbying efforts.

In 2021, the Kentucky Public Service Commission blocked the state’s utilities from clawing back $400,000 in contributions paid to EEI after the companies failed to disclose how trade association funds were spent.

Ratepayers may also cover lobbying efforts conducted by utilities’ internal employees. According to the EPI report, utilities’ influence efforts can be aided by “community relations staff” who may spend some of their time lobbying.

Missy Stults, director of Ann Arbor’s sustainability office, said in her testimony before the Michigan Public Service Commission in DTE’s 2023 gas tariff case that the commission “should require DTE to keep records of the time employees spend lobbying.” Local officials spend so that she can ensure this.” Amounts are not included in the price.”

In a rebuttal, Theresa M. Uzenski, manager of regulatory strategy and accounting for DTE, said the utility deducted $220,000 for “Regional Relations Expenses Political Advocacy.” However, DTE did not provide a detailed list of these expenses.

“Without such a record, it is virtually impossible to ensure that these costs are not passed on to customers,” Weinmann and Vardi write.

To address these issues, the report recommends that states prohibit the collection of salaries for employees engaged in collective bargaining cases, define lobbying to ensure compliance, and require detailed annual disclosure of lobbying expenditures.

States like Colorado, Connecticut and Maine have blocked utilities from passing on lobbying costs to customers, which could save ratepayers hundreds of thousands of dollars annually.

Advertising spending shows how difficult it is to hold energy suppliers accountable

Advertising is another area where ratepayers may pay to promote the interests of utilities, even if the advertising is intended to be purely informational.

“Utilities also regularly inserted self-promotional messages into informational advertising and mixed them with messages that might be legitimate for renovation, such as educating customers about energy efficiency or safety measures,” Weinmann and Vardi write.

DTE spent $51 million on advertising between 2014 and 2023, the fifth-largest expense for the companies included in the report. The company’s current electricity price case includes advertising expenditures related to “public safety, environmental protection and billing practices.” This represents approximately $5.7 million out of a total of $11.39 million in ad spend.

Still, Bandyk says this shows how difficult it can be to hold DTE accountable.

“How do we check how much advertising is just about ‘public safety, conservation and billing practices?'” she said.

EPI recommends that states cover only purely informational advertising that clearly serves the public interest. It also recommends requiring detailed disclosure of energy suppliers’ advertising and marketing expenditure and requiring companies to display this clearly in advertisements if paid for by customers or shareholders.

Regulatory practices “increase risk for customers,” advocates say

In the absence of detailed disclosure requirements and strict rules barring lobbying, travel or advertising in tariff increase requests, the EPI report said advocacy groups and regulators are forced to comb through tariff cases to find impermissible charges.

“It is not a foolproof way to protect customers from incurring unreasonable costs,” write Weinmann and Vardi. “On the contrary, it increases the risk that customers’ electricity bills will include at least some of these costs.”

Bandyk previously told Planet Detroit that the increasing frequency of requests for rate increases from DTE is also making it difficult for advocacy groups to find the time and money to assemble expert reports to challenge the utility. She said these frequent filings give utilities “more ability to push higher rates against overwhelming and thinner opposition.”

She emphasized that better disclosure rules alone may not be enough to hold utilities accountable because advocates would still be forced to rely on the company’s information.

“A much simpler system would be to ban all advertising or all membership fees, rather than engaging in this selection process that cannot be verified,” she said.