The majority of electricity that is produced in Michigan — 702 trillion Btu in 2017 — comes from two investor-owned, regulated public utilities that are both located in the Lower Peninsula: DTE Energy and Consumers Energy.[93] The largest utilities, with the most customers, in the Upper Peninsula are also investor-owned, regulated public utilities called the Upper Peninsula Power Company, or UPPCO and Upper Michigan Energy Resources Corporation, or UMERC.[94]
Investor-owned public utilities are businesses that provide electricity and other utility-related services to customers. They are private companies, but their operations are regulated by state government. For example, the Public Service Commission in Michigan is responsible for approving the rates these public utilities can charge customers for their services.[95]
Investor-owned public utilities are very common across the United States. Edison Electric Institute, the national association representing investor-owned electric utilities, describes their membership as the utilities that “provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia.” [96]
Partly in exchange for being regulated by the state, investor-owned utilities are guaranteed a minimum return on equity and are provided a determined share of the electricity generation market. This is the case in Michigan: As a result of Michigan’s Public Act 286 of 2008, these regulated, investor-owned utilities all serve as effective monopolies in their operating areas.[97] In Michigan, these companies are guaranteed 90% of the weather-adjusted retail electricity sales within their respective operating areas.[*] This means that no other utility or electricity provider is allowed sell to more than 10% of the retail electricity sold in these defined markets.
[*]Electricity customer use is, in part, forecasted by utility generators based on expected average weather patterns throughout the year. Unusual or unexpected weather patterns can cause utilities to use more or less generation capacity than expected. Actual generation use is compared with forecasted use at the end of the year and expected costs are corrected, based on actual temperatures and customer use.