How Electric Rates Are Set

Michigan Energy Rates

We work to provide reliable, safe and economical energy services and offer a variety of rate options to serve your unique needs. The electric and natural gas services we deliver are regulated by the Michigan Public Service Commission (MPSC).

What Costs are Included in Rates

Generally speaking, rates are divided into three parts:

Major investments that generate and deliver energy, including power plants, electric distribution (poles and wires) and natural gas pipelines. This includes upgrades to stay current with environmental regulations.

Operating expenses including fuel for power plants (such as coal and natural gas), the cost of electricity or natural gas we purchase from the energy market and activities related to maintenance, repair, service and billing.

Michigan energy programs supporting areas such as energy efficiency and renewable energy.

Residential Electric Charges

As a residential customer, you have two types of charges on your electric bill: Power Supply and Delivery Service.

Power Supply

Power Supply charges include costs associated with creating the electricity and moving the electricity over high voltage transmission lines. The Power Supply costs you pay are directly related to the amount of electricity you use, which is measured in kilowatt-hours (kWh).

In some of our rates, you may pay a different amount per kWh of electricity depending on the time of the year and the amount of energy you use. Here's an example using our most common residential rate:

  • During winter months (October - May) the price for each kWh remains the same, no matter how much you use.
  • During summer months (June -September) the increased demand - mostly from air conditioners - makes it more expensive to create or buy electricity. To help reduce energy use during these months, the cost of electricity increases if you use over 600 kWh per month. This price increase actually helps keep everyone’s costs down because it helps avoid expensive energy and system upgrades, that would otherwise be needed and increase our shared cost.

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Energy Delivery

Delivery Service charges are associated with providing customer services and local energy distribution.

  • System Access: This is a fixed fee of $7.00 per month, which covers costs associated with metering and billing.
  • Distribution: This charge is associated with delivering electricity from the transmission system to your home including necessary equipment, maintenance and operating expenses.
  • Energy Optimization: This monthly per kWh fee supports Energy Efficiency programs that are included in Michigan’s energy laws. These programs help avoid costly investment in new energy sources by reducing household energy use.
  • Other charges on your bill may vary.

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