LANSING, MI – The largest natural gas utility in Michigan has the all clear to raise rates as temperatures begin to drop this fall.
Consumers Energy won approval from state regulators on Tuesday, Sept. 30 to hike rates by $157 million beginning in November — about 36% less than the for-profit utility initially asked for last year.
The hike is expected to increase monthly bills by $4.44 or 6.88% for a residential customer with typical usage, according to the Michigan Public Service Commission, which oversees gas companies.
Regulators said the rising rates will fund important safety and reliability investments, like replacing higher-risk vintage gas mains and detecting methane leaks, while balancing affordability concerns and state goals to cut emissions from planet-warming fossil fuels like natural gas.
“It is not a blank check for unchecked infrastructure investment nor is it a halt to necessary modernization of the gas system,” said Shaquila Myers, one of the three members of the commission that issued the 342-page order permitting the increase.
Utility watchdogs said regulators were right to slim down the rate increase request, which Consumers revised from its initial $248 million level to $217 million as it was under review.
But the cut “should have been much bigger,” said Amy Bandyk, executive director of Citizens Utility Board of Michigan, a nonprofit that advocates for residential ratepayers.
“As CUB detailed in a 2025 report, Michigan ratepayers cannot afford the expanding investments into the gas system that our utilities are planning over coming decades,” she said in a statement.
Collectively, Michigan gas utilities, including Consumers, are on track to invest nearly $60 billion in gas infrastructure through 2050 as systems age, the report projected.
To show the magnitude of the spending, it found current investment levels, funded by customers, far outpace the annual capital budgets of Michigan’s two largest cities, Detroit and Grand Rapids. Its authors warned about the possibility of ballooning rates as a result.
In prior responses to the concerns, Consumers has underscored the need to replace legacy gas piping with modern, corrosion-resistant materials and reliably serve its 1.8 million gas customers.
In a statement issued Tuesday, Consumers spokesperson Brian Wheeler said the utility recognizes its responsibility to safely deliver energy while keeping bills as low as possible.
He emphasized Consumers’ method of reducing costs for its gas customers by purchasing most of its gas during the summer while prices are lower and stockpiling it for the heating season in Michigan’s ample underground reservoirs. Wheeler said it avoided over $120 million in gas supply purchases last winter.
“That strategy, combined with continued system investments while controlling costs, is helping reduce increases and keep rates as competitive as possible while also providing assurance for our customers that our system will be safe and keep stoves on, water hot and homes warm,” he said.
The rate hike is the product of a 10-month legal process called a “rate case,” where business groups, environmental advocates and consumer watchdogs file legal testimony seeking to reduce or modify Consumers’ requested hike.
Some, like Michigan Attorney General Dana Nessel, sought to slash it much further, by more than half.
Advocates also argued that regulators should reduce the rate of profit for shareholders gas utilities earn on investments. Known as return on equity, it is charged to ratepayers as part of their bills, ideally set high enough for utilities to attract investment for projects but not so high it charges utility customers more than necessary.
Regulators decided to reduce the rate from 9.9% on every dollar spent to 9.8%, saying the move aligns it with that of DTE Energy and balances Consumers’ request to raise the figure with advocates’ arguments to lower it.
It may not sound like much, but the small shift adds up over hundreds of millions in investment. Citizens Utility Board is “pleased” with the decision, but urged regulators to go further, Bandyk said.
“A problem with this high return on equity is that it encourages the utility to keep building more gas infrastructure in order to collect a profit for shareholders, despite Michigan’s commitments to reduce greenhouse gas emissions and ultimately move away from gas in the long-term,” she said.
Environmental groups have pushed Consumers to reduce long-term investments in gas systems to avoid locking in carbon emissions, criticizing the utility in legal testimony for failing to consider an accelerated transition away from the fuel, now used to heat some three quarters of Michigan homes.
On Tuesday, regulators ordered Consumers to better plan for this possibility, updating 10-year forecasts for gas sales and considering the costs and risks of different “energy transition” pathways.
Other parts of the rate order include approval of investments in Consumers “city gate” stations that raise or lower gas pressure, expenditures to address a backlog of known gas leaks at an accelerated rate, costs for equipment at gas storage fields and spending on an initiative that helps low-income customers enroll in energy assistance programs.
The new rates are set to go into effect Nov. 1.
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