LANSING, Mich. — Sen. Jim Runestad on Wednesday introduced legislation that addresses rising utility rates by requiring companies to adhere to actual-cost data instead of unreliable future projections when seeking rate increase approval from the Michigan Public Service Commission (MPSC).

This bill is a reintroduction of Runestad’s Senate Bill 812 of 2024, which failed to pass into law, and comes at a time when utility companies continue to ask for rate hikes as Michigan residents continue to struggle with day-to-day costs. Since 2020, the MPSC has granted almost $800 million in rate hikes to Consumers Energy alone. Consumers Energy recently requested another $456 million hike on the very first day it was legally allowed after the previous year’s $436 million request.

“This is absolute highway robbery,” said Runestad, R-White Lake. “Homeowners are forced to pay ever-increasing rates while service stays the same and the big utility companies pile up money. This broken system must change, and my bill will put an end to these never-ending, sky-is-the-limit rate hikes.”

When applying for a rate increase with the MPSC, a utility provider must submit a 12-month financial breakdown of its costs and revenues known as the “test year” or “test period.” While Michigan utilities historically had to use a test year based on actual, audited past data, energy law reforms in 2008 authorized companies to use a future test year. This modern approach allows utilities to justify rate adjustments based on speculative projected costs and revenues rather than actual historical financial records.

SB 1031 would require utility companies to once again rely on actual costs when requesting rate increase approval from the MPSC instead of future projections.

Runestad noted that his bill comes at an important inflection point as proposals for data centers rapidly develop across the state.

“What is to stop utility companies from asking for rate hikes down the road, citing expected future data center energy usage or ‘necessary’ upgrades, even though they don’t possess actual numbers on data center energy consumption?” Runestad said. “A utility can overestimate costs with nothing to lose. If the costs are high, consumers pay; if the costs are low, consumers pay.

“How is that fair to residents who can’t switch energy providers without moving across state lines?”

The senator added that companies should have a significantly higher burden of proof than they currently operate under and that the Legislature has yet another opportunity to pass his legislation to address the issue.

“By using actual data, utilities can fairly and accurately prepare for future energy needs in Michigan,” Runestad said. “If costs rise, they have a chance to demonstrate that. However, the endless cycle of rate increase after rate increase without any consideration for the consumer must end. Legislators must be willing to step up to help protect people from what are essentially the utility pseudo-monopolies of our state.

“Michigan residents deserve affordable and reliable energy.”

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