Forecast: High energy prices in Michigan this year
The Michigan Public Service Commission on Friday warned state residents to expect little relief from high energy prices this year.
In its latest energy outlook, the commission described rising costs of electricity, gasoline and natural gas — a reality that likely isn't surprising to residents of the state who for weeks have been paying more than $5 per gallon at the gas pump at the same time inflation has increased the cost of groceries and other necessities.
Residential electric rates have raised in Michigan, as customers of investor-owned utilities in saw a median rate hike of 6.4 percent between May 2021 and May 2022. The biggest increases were in the central and western Upper Peninsula.
A typical residential customer of DTE Electric paid a monthly bill of $92.03 last month (18.41 cents per kilowatt-hour) compared to $89.40 for the same period a year ago (17.88 cents per kWh); that's an increase of 2.9%.
Consumers Energy customers actually saw their monthly bills fall a bit. They paid an average of $91.71 last month (18.34 cents per kWh) compared to $93.20 a year ago (18.64 cents per kWh); that's a decrease of 1.6%.
DTE and Consumers are regulated by the Michigan Public Service Commission. They cannot raise prices to users without approval from the commission.
Declining generation capacity and rising demand are to blame for the upward pressure on electric rates, said the Midcontinent Independent System Operator, which operates the power grid in 15 states and Manitoba.
Heat, drought, closed power plants and supply-chain issues will strain the electric grid and potentially cause blackouts across parts of North America including the Great Lakes region this summer, Bloomberg reported in May.
But Michigan has a "robust" energy system that readily can meet residents' needs, said Amy Bandyk, executive director of the Citizens Utility Board of Michigan, echoing what commissioners stated in the conclusion of their energy outlook Friday. There's enough power, she said.
Commissioners expect there to be an increase of electricity use this summer if temperatures are within normal range. Overall, they said electric usage is expected to increase 0.9%, largely fueled by demand growth the industrial sector. Demand in the residential and commercial sectors are expected to drop.
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Gas prices to remain high
Motor vehicle fuel costs also are "significantly higher" than normal, the commission said in a Friday release, in part because of Russia's invasion of Ukraine and embargoes against Russian oil. Unleaded gasoline averaged has averaged $5.20 per gallon this summer in Michigan, while diesel fuel averaged $5.89 per gallon.
Gasoline has remained over $5 a gallon since early June in metro Detroit. The average price for a gallon of gas in Michigan for all of 2021 was $3.16, a "relatively low" rate the commission said was caused by reduced demand during the pandemic.
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Demand for gasoline will increase slightly, by about 0.1%, this year, the commission said. National gasoline inventories are near the bottom of the five-year summer low.
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Diesel fuel costs average $4.69 per gallon this year but are expected to decline to $4.13 per gallon next year.
U.S. crude oil production is expected to increase this year and next. The U.S. Energy Information Administration predicts average petroleum costs will decrease next year.
The commission said demand for natural gas is expected to grow significantly, by 13.8% across all sectors. That breaks down to a 20.7% increase in demand for electric power generation, a 13.8% in the residential sector, 10.5% in industrial and 6.3% in commercial.
The U.S. Energy Information Administration expects natural gas prices to average $7.69 per thousand cubic feet this year and $4.92 next year, compared to $4.06 in 2021. Prices were especially high this month at $8.16 per thousand cubic feet.
Find help with energy bills
The public service commission urged Michiganians to find help paying their utility bills if they need to. It directed people to the following resources for help with utility bills:
- Call 211 or visit www.mi211.org, a free, confidential service that can connect Michigan residents with assistance programs.
- Reduce energy use with guidance from the commission and the U.S. Department of Energy. Advice includes closing shades to block daytime sunshine, using a kitchen exhaust fan to remove heat when cooking, turning off ceiling fans when you leave a room, using appliances like dishwashers at night, using a dehumidifier instead of air conditioner and installing window air conditioning units in shady windows.
- Enrolling in energy assistance, emergency relief and weatherization programs offered by the Michigan Department of Health and Human Services. Veterans can get help from the Michigan Department of Military and Veterans Affairs.