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Michigan Utilities Focus on Grid Resilience to Prevent Outages

More than 300,000 DTE and Consumers Energy customers across the state lost power during August as the grid failed to keep up with a growing demand. To prevent future shutdowns, utilities will need to increase their reliability.

(TNS) — When Joe Brewer took over his father's electrical contracting business, Metro Electric, there wasn't much demand for standby generators that provide homeowners with backup electrical power to HVAC systems, security systems, and household appliances such as refrigerators, stoves, and water heaters.

They were considered costly and unwarranted.

That's no longer the case.

With Michiganders experiencing more power outages and for longer periods of time the demand grew and in 2015, Brewer's business expanded to include the installation and maintenance of standby generators.

He sold 20 in that first year and the numbers have been doubling ever since.

In 2021, the company installed nearly 400 residential and commercial generators.

"It's really been picking up in the last five years," said Brewer, who had purchased the building next door in order to accommodate the growing business.

"These are all generators being installed," he said during a tour of the Romeo warehouse.

What used to be a luxury has become as standard as air conditioning. .

"We saw an uptick during COVID when people started working from home," Brewer said, and since it's not just the refrigerator and air conditioner that require power but computers, cameras and printers, not to mention commercial ovens, kilns and other equipment operated by a cottage industry that has also doubled since the pandemic.

"We just installed a generator yesterday," said Kristina Perkins, vice-president of Metro Electric, of one ordered by a woman who had turned an old house into a business.

The cost for a standby generator ranges anywhere from $10,000 to $14,000. That includes installation and all parts. Once installed as soon as the power goes out the generator automatically kicks in.

Customers can monitor the generator from their phone and even subscribe to a yearly service, which monitors the unit's performance during power outages.

"A lot of our customers are snowbirds," Brewer said. "So, when they're away we can monitor it here. This gives people peace of mind and the comfort of knowing their lives will not be interrupted by power outages," Brewer added, noting with an aging grid and with a future depending on electricity the demand is only going to increase.

Outraged By Outages

This past August more than 300,000 DTE and Consumer Energy customers in Michigan were again without power, prompting a demand for changes. Among those touted by the Michigan League of Conservation Voters is a package of bills that would increase outage credits for customers, make them automatic and hold utilities accountable for poor service.

"It's unacceptable that Michiganders, who pay the highest rates in the Midwest for the longest time out of power in the Great Lakes region, will likely once again be left in the dark for days," said Bob Allison, deputy director for the Michigan League of Conservation Voters. "Our families are already burdened with the rising cost of groceries and gas, and can't afford the devastating impact of losing an entire refrigerator of food and medicine while our lawmakers sit on bills that could provide real relief and true accountability of these utility companies," he said, in a news release.

House Bills (6043-6047) were introduced in April but have yet to receive a hearing.

Hardening The Grid

The state's major utility companies know they have to double down on their investments to make sure the power grid is more reliable and resilient than ever.

In 2019, Michigan, with major storm events, ranked fourth nationwide for the highest average annual power outages and the highest average annual duration of power outages according to data compiled by the U.S. Energy Information Administration, signaling that the state's two major utilities still have work to do to bolster reliability.

Those resiliency metrics have improved slightly from 1.4 average power outages per year in 2019 to 0.94 average power outages per year in 2021. The average duration of those power outages has decreased from 209.7 minutes in 2019 to 165.5 minutes in 2021.

Ryan Stowe, vice president of distribution for DTE, said the company filed a $7 billion, 5-year plan with the Michigan Public Service Commission (MPSC) last fall outlining how it planned to harden and upgrade its grid as demands posed by automobility/electrification, increasingly severe weather trends, and the fast-evolving needs of consumers and businesses continue to grow.

"In that plan, there are four pillars including infrastructure resilience and hardening and redesign in addition to tree trimming and technology upgrades," he said. "We have to make sure the trees are out of the way. That's number one. Then, we have to continue to upgrade and harden the underlying infrastructure."

According to the federal data, Michigan's two largest utility companies, DTE Energy and Consumers Energy, which combined service about 2 million customers statewide, have experienced an increase in some reliability metrics.

Since 2018, DTE has seen its average power outage minutes per year increase from 485 to 927 while Consumers has seen that number increase from 406 to 911. The average minutes per power outage per year has increased from 357 minutes to 586 minutes for DTE and 314 minutes to 569 minutes for Consumers.

Stowe said DTE plans to increase design standards for its infrastructure, meaning larger poles and fiberglass cross arms as opposed to wood.

"This new infrastructure is not affected by the rain, snow, ice, and moisture," he said. "The infrastructure is stronger and can perform better over time."

Greg Salisbury, vice president of electric distribution engineering, said the company's $5.4 billion, 5-year plan filed with the MPSC last year shows increased investments to provide long-term and sustainable solutions to making its infrastructure more reliable and resilient.

He said the company has efforts underway that involve inspecting the grid 1-2 times per year by helicopter to ensure potential system failures are identified so crews can be sent out and make a repair before an outage occurs.

"We're also investing in the latest technology to automate our high voltage system so that when an issue happens, the system can make adjustments," he said. "That means flipping a switch to either restore power or reroute power so that we can minimize the amount of outage time and minimize the number of customers affected where we do have to make a repair."

Starting this year, company engineers will inspect over 30 percent of the low-voltage systems and then assign crews to make repairs immediately on things that are imminently subject to the risk of an outage.

"This is a really important way to find the outage before it happens and eliminate it," he said. "We're being more aggressive about that than we've ever been. Starting this year, we're also identifying key parts of our system where we can install fusing, which is much like a circuit breaker in your house. If a short section of line, that has maybe 10 or 12 houses on it, happens to go down the fuse would prevent customers down the line from losing power as well, keeping the outage isolated while we make repairs."

Amy Bandyk, executive director of the Citizens Utility Board of Michigan, a nonprofit formed in 2018 to represent the interests of residential energy customers across Michigan, said the utilities need to do more to emphasize preventing power outages rather than reacting to them.

She said investor-owned utilities, like DTE and Consumers, are motivated by projects that provide a return to their shareholders

"In Michigan's regulatory model, the utilities are financially incentivized to invest in capital, like building new power plants or new power lines," she said. "But we don't need the most capital-intensive solutions. We need solutions that deliver the most improvements in reliability at the lowest cost for ratepayers possible."

For example, software like the automatic detection technology is not particularly capital-intensive, but it has enormous potential to make the grid more reliable, says Bandyk.

Although DTE and Consumers have significantly increased their tree-trimming efforts in recent years to help reduce outages, Bandyk said it's not a capital investment and has, historically, been underinvested in even though it is one of the cheapest ways to reduce power outages.

Tree Trimming

Michigan has around 14 billion trees. Although beautiful, they can and have caused massive, prolonged power outages across the state.

For DTE and Consumers, around 60 to 70 percent of their annual power outages are caused by trees and other vegetation.

Dan Scripps, chairman of the MPSC, said preventing power outages all starts with tree trimming evident by increased grid reliability in areas where trees are being cut back off the poles and away from the lines.

"We have to do more vegetation management," he said. "I think we are moving in the right direction on that, but we've got to go further and we've got to go faster to catch up. I think we're finding that we're behind, but we've taken several steps over the last couple of years to try and catch up. We didn't get into this situation overnight and we won't get out of it overnight."

In 2019, the MPSC allowed DTE to do a surge in tree trimming, approving a rate increase that authorized DTE to spend $283 million on tree trimming through 2021 for the first three years of a seven-year "surge" trimming program.

The surge will last through 2025 and DTE can recoup the amount it spent on tree trimming when it presents costs to the commission for future rate case increase requests.

DTE maintains an average 15-foot clearance around its electrical equipment, according to Rachel Steudle, the company's tree trimming manager.

"On a weekly basis, DTE is trimming 100-150 miles of trees with 1,600 trimmers working 6-days-a-week to meet our maintenance goals," she said. "In some instances, we may determine the tree is a better candidate to be removed rather than trimmed. We are really focused on the health of the tree too."

According to the MPSC's 2019 Statewide Energy Assessment report, DTE spent $89.1 million on tree trimming in 2018. This year, DTE employs 1,600 tree trimmers and is spending over $100 million on its tree trimming program.

In 2021, the MPSC approved a $134 million rate increase for Consumers Energy to support tree removal among other projects.

Salisbury said Consumers will spend around $100 million on tree trimming this year, up 60 percent from 2012 when it was around $40 million.

"Trees are a risk factor as much as they're a blessing here in Michigan," he said.

In some areas it's just going to be more cost effective to invest in underground circuits rather than trying to hold back the trees that are constantly encroaching an aging system but what is being done has made a difference.

"We are now seeing weeks and months where trees are not the number one power outage risk factor," he said.

Rate Changes

Both DTE and Consumers have pending rate cases before the MPSC that would increase electricity rates. The additional revenue would support system resilience and reliability-related projects.

Bandyk said the board intervenes in these cases and analyzes them with a "fine tooth comb" to make sure the proposed increases are reasonable and prudent.

"Rate increases by themselves are not necessarily the problem," she said. "When costs go up due to inflation, utilities ask for higher rates to cover their increased costs. Our problem is not with rate increases to pay for these everyday costs of doing business, but rather, with costs that are not prudent from the standpoint of trying to do what is most cost-effective for customers."

According to MPSC records, DTE submitted its most recent rate case on Jan. 18. If approved, rates would increase by 8.8 percent for residential customers and 4.1 percent for industrial customers and generate an additional $388 million in annual revenue for the company beginning in 2023.

Stowe said rate increases help cover a variety of investments that the company believes are necessary and prudent to include replacing some of the oldest infrastructure, building new substations to increase capacity, and making other upgrades.

According to MPSC records, Consumers submitted its most recent rate case on April 28. If approved, rates would increase by 6.8 percent for residential customers and 9.2 percent for industrial customers and generate an additional $225 million in annual revenue for the company beginning in 2023.

Salisbury said rate increases will save customers money in the long-run by reducing and, in some cases, eliminate outages altogether.

"These investments prepare our grid for the future," he said. "We want to make sure that we are providing sufficient capacity and reliability so that people can have an electric vehicle parked in their garage and get it charged up overnight. We know that electricity is going to be the fuel of the future. Part of our reliability and resilience improvement is to prepare us for that future where we rely on the electric system even more than we do today."

He said the company is always on the lookout for federal grant opportunities to help increase revenue as opposed to increasing rates for customers.

Earlier this year, the State of Michigan received nearly $5 billion in federal infrastructure funding. At this time, it's unclear how much the utilities will receive or have the opportunity to tap into from that pot of money.

"We're optimistic that we'll be able to take advantage of some of that federally available infrastructure money," said Salisbury. It's time to be really prudent and really careful with our customers' money because the portion of what they spend on energy is going to be driven up with natural gas prices so high."

The proposed legislation would increase outage credits and make them automatic, is supported by Attorney General Dana Nessel.

Right now, customers without power for at least 120 hours, or five days, will receive a $25 credit from the utility through an application process.

Scripps said the MPSC is seeking, through its rule-making process, to increase that outage credit to $35, make it automatic, and provide an additional $35 for each additional day without power.

"We're in the process of updating provisions within our service quality rules to do many of the same things outlined in that legislation," he said

Smaller Business Owners

When it comes to power outages business owners and even residents have three choices to make.

"Pray that it doesn't happen. Install a permanent generator or set up a contract with a company that provides generators in case it does happen," said Jason Eddleston, co-owner of Ray's Ice Cream in Royal Oak.

He and his wife Lindsey purchased the ice cream shop that has been family owned and operated for decades, hoping to carry on that tradition with their own family.

"We're expecting our first child," said Eddleston, who purchased the business 65 days ago.

Eddleston admits ever since he was a boy he fantasized about owning an ice cream shop but it was really the idea of owning a business as a family that prompted he and Lindsey to invest their future in the shop.

They know they have the support of the community. At the height of the pandemic the former owner launched a GoFundMe account to save the ice cream shop from a financial meltdown, due to the lockdown and lack of customers but also a power outage that destroyed hundreds of gallons of homemade ice cream. In the end, more than 1,800 people not only helped him reach his goal of $50,000 but surpassed it by $28,000.

"It's a neighborhood gem," said Eddleston, who has a bachelor's degree in entrepreneurial management from the University of Pennsylvania's Wharton School of Business and has always been very involved in his local community. Lindsey also has a background in sales and commercial real estate so they are well suited for the task ahead of them. "We felt our skill set would be a benefit."

Still, they are in a business that relies heavily on the weather, which has changed dramatically since Ray's Ice Cream first opened in 1958.

"Climate change is a real thing," Eddleston said. "Spring and fall are shorter and summer and winter are longer."

As a result, more people are using their air conditioning and heaters and all of that puts a strain on the power grids and the utility providers.

(c)2022 The Macomb Daily, Mount Clemens, Mich. Distributed by Tribune Content Agency, LLC.
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