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Warren — Mayor James Fouts says a proposed utility rate increase will pinch the budgets of municipalities such as his that want to switch streetlights to energy-efficient LEDs.

In an application last month by DTE Energy to the Michigan Public Service Commission, the utility said it needs $370 million in additional annual revenues as soon as possible in 2015.

That translates to 3.2 percent increases for homeowners, from 15.8 cents per kilowatt-hour to 16.3 cents, but businesses could see rate reductions.

Fouts said Thursday any increase means the city will have to pay more each month for power and that means less money for streetlight replacements. The city's spends $250,000 a month on power for traditional lights, he said.

The increased costs will make sticking with traditional high pressure sodium streetlights a more cost-effective option. But, he says, they're not as efficient or bright as the newer LED lights. Fouts said LED streetlights are environmentally friendly and brighter and therefore a crime deterrent.

Fouts sent a letter to the PSC on Jan. 16, asking it not to support the increase.

"This position is counterproductive to a lot of things people consider important such as the environment, public safety and the economy of the cities," Fouts said. "I hope that the PSC will reverse this because it is not good policy. I think it would deter a lot of municipalities."

Scott Simons, spokesman for DTE, said the rate increase reflects costs adjustments related to switching to new streetlights.

"When we started offering LED streetlighting four years ago, communities were charged an experimental rate," Simons said. "That was based on our current knowledge of the cost at that time. As we gained more experience with LEDs, we changed the pricing to reflect the additional cost associated with that type of lighting. The rate case that we filed last month reflects the actual cost of this emerging technology."

Warren is in the midst of an LED streetlight conversion project, Fouts said. Nine percent of the city now has new lights. LED lighting would reduce energy consumption 50 percent, he said.

Rick Bunch, director of Southeast Michigan Municipal Street Lighting Consortium said a rate increase doesn't encourage energy conservation.

"We haven't gotten the full briefing from DTE yet on the rationale behind this, but we want to see energy conservation rewarded not discouraged," said Bunch.

The Public Service Commission's pre-hearing to set a timetable for DTE's rate review is Jan. 29. The commission has until July 1 to make a decision or DTE can self-impose its rate changes, Fouts said in a statement.

uwatson@detroitnews.com

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