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Cities look to challenge DTE over LED streetlight cost hikes

Feb 21, 2015

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Some southeast Michigan cities are preparing to take on the state’s largest utility.

At issue is DTE Energy’s plan to raise rates on municipal LED streetlight installations.

Rick Bunch, director of the street lighting consortium with the Southeast Michigan Regional Energy office, said that’s a problem for cities that have already invested heavily in LEDs, which are more energy-efficient, but cost more upfront.

“Cities want to make back that investment in annual operating savings,” Bunch says. “If there’s very little difference between the current technology and the new technology, they’ll never make back that investment.”

Bunch said many southeast Michigan cities — including Ypsilanti, Dearborn, and Detroit — have invested heavily in LEDs, with the belief it would produce long-term cost savings.

“They had been operating on cost projections from DTE that showed them reaping relatively robust savings over the lifetime of this technology,” Bunch says. “And so for the annual operating costs of the LED’s to go up by 10-15%, depending on wattage, really bites into the savings they projected.”

Even more puzzling to some is that DTE actually wants to lower rates to operate high-pressure sodium street lamps, despite the fact that they use substantially more electricity.

Environmental groups are also upset by the proposed rate changes, which they see as an effort to squash municipal investment in cleaner technologies.

“Literally and figuratively, it doesn’t make sense,” to raise rates on LEDs while cutting rates for more energy-intensive lighting, says Eric Keller of the group Clean Water Action.

But DTE contends that it’s merely adjusting prices to reflect the true cost of LEDs as it “gains more experience” with the technology, according to a company statement.

Bunch says hearings before the Michigan Public Service Commission should help us understand whether DTE’s claims are justified by actual expenses.

So far, 13 cities have signed on to formally intervene in DTE’s rate case before the MPSC, according to Clean Water Action’s Keller.

He expects that number to grow to at least 20 by the end of the month. “There are definitely a lot of communities that see this as something they should get involved with,” Keller says.

DTE filed its new proposed rate schedule in late 2014, but state approval hearings could carry on through much of this year.