Michigan’s monopoly energy providers could face as much as $10 million in penalties if they don’t cut down on power outages in the coming years.

Or, they could pocket the same amount as a bonus from ratepayers if they do, according to a plan approved by state regulators on Thursday.

“Our goal from the beginning was to develop a framework that, above all, drives improvement in reliability, particularly in the areas that are most frustrating for customers,” said Dan Scripps, chair of the Michigan Public Service Commission that oversees the state’s utilities, said in a statement.

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“By staying focused on a relatively small number of performance metrics closely tied to the most acute pain points experienced by customers, I’m confident that this framework will help accelerate the progress we’re already seeing in distribution and reliability improvement.”

The plan approved by the MPSC on Thursday has been in the works for two years, inspired by hundreds of thousands of Michiganders left shivering in the dark amid an ice storm in early 2023, MLive reports.

Roughly 934,000 customers lost power in that Feb. 23 storm, which downed roughly 11,000 power lines, according to The Detroit News.

The miserable experience is among scores of annual blackouts for Michiganders, who pay some of the highest rates for some of the least reliable service in the country.

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An audit by Liberty Consulting Group released in September found both DTE and Consumers Energy, the state’s monopoly utility providers, were “worse than average” in terms of power outages, restoration delays, and tree-trimming in both 2022 and 2023.

The Liberty report followed analysis of data from the research nonprofit Climate Central last year that showed Michigan residents suffer more and longer power outages than all but two states, despite paying 11% more for their monthly bill than the U.S. average, Bridge Michigan reports.

The analysis shows only Texas and California – the top two states for population – have recorded more major power outages impacting 50,000-plus customers than Michigan, putting the state ahead of all others in the Great Lakes region and states routinely impacted by hurricanes, such as Louisiana and Florida.

That reality motivated the MPSC to form a workgroup in 2023 to study ways to coerce Michigan’s major utilities – Consumers Energy and DTE – to do better.

After “extensive input obtained through public engagement sessions and comments,” commission staff recommended “seven metrics measuring the average length of customer outages, the length of time utilities take to restore power both after storms and in calm weather, the number of customers experiencing four or more outages per year, and the utilities’ worst-performing circuits,” according to the MPSC.

The commission ultimately adopted the proposal “with modifications aimed at focusing initially on improving the fundamentals of distribution reliability, leaving other related issues … for later iterations of the workgroup’s efforts,” the MPSC statement read.

The MPSC also tasked DTE and Consumers with filing their own financial incentive mechanisms in standalone dockets by April 15, and set a limit on penalties and incentives for 2026 at $10 million.

“In today’s order, the Commission said it will commence the first standalone proceeding for reviewing metrics by Oct. 15, 2027,” according to the statement.

The $10 million in penalties or incentives pales in comparison to the $217 million electric rate hike recently won by DTE, the latest result of what’s become annual double digit rate hike requests. Likewise, Consumers is currently seeking another $255 million from ratepayers.

“DTE Energy supports the framework’s focus on reliability, as it aligns with the company’s commitment of reducing outages by 30% and cutting outage time in half by 2029,” DTE spokesman Ryan Lowry said in a statement.

“Keeping the lights on is Job No. 1 for Consumers Energy,” spokesman Brian Wheeler said in a statement. “We believe this new approach will reinforce our Reliability Roadmap that is already making Michigan’s electric grid more reliable.”

While the MPSC and the utilities that fund it are content with the new plan, others who weighed in during its development are less impressed with the final result.

“While we endorse Michigan taking a step toward performance-based regulations, these particular regulations set too low of a bar for Michigan utilities to step over to avoid paying any penalties,” Amy Bandyk, executive director for the Citizens Utility Board of Michigan, wrote to MLive in an email.

Bandyk argued even if DTE and Consumers make “marginal” improvements to reliability to avoid the penalties, the companies would still rank among the worst in the country.

Last month, both Consumers and DTE congratulated themselves on improving reliability slightly in 2024.

DTE customers experienced a nearly 70% improvement in time spent without power between 2023 and 2024, due to $1.5 billion in grid improvements and less extreme weather, according to a company statement.

“The average Consumers Energy customer also went without power for 155 minutes in normal weather last year, down from 176 minutes,” a statement read. “The 12% decrease in total minutes without power from 2023 to 2024 is the largest improvement over the past decade.”