Hey Consumers Energy! What happened with the MPSC investigation?
Early in July, you might have seen headlines about the Michigan Public Service Commission (MPSC) announcing an investigation which included inquiry into material delays that impacted customers’ energy services. The MPSC is our regulatory body acting on behalf of the State’s and our customers’ best interests, and we set out to answer their questions quickly and transparently. We filed our response with the Commission on Friday, August 4.
We take these issues and the impacts to customers very seriously and have been working to resolve these issues. We are committed to doing what is right for our customers, which includes improving our performance and communications.
The MPSC’s investigation is focused on three areas:
- Electric smart meters, specifically 3G meter replacements as well as malfunctions which affected a small percentage of 3G and 4G meters
- Estimated bills from non-communicating meters
- New electric and natural gas service installation delays primarily caused by material shortages
Let’s address those three concerns here. We’ll start with the smart meter issue.
Electric Smart Meters
When Verizon announced their plans to retire 3G cellular service before the COVID-19 pandemic, we jumped into action. Our vendor made guarantees to complete the work before 3G service was retired, and our contract included plans for what to do if they could not complete the replacements before the cellular network ended in January 2023.
Material shortages began to crop up in 2021. At the same time, we were notified by the same vendor of a battery contamination issue that at the time only impacted less than .02% of their meters. By 2022, meter inventory continued to decrease as the battery malfunctions and unrelated display failures increased. That meant we had more meters to replace at a time they were tough to come by. While we had replaced about 420,000 3G meters before 3G service ended, there were still 180,000 to replace.
We worked to find solutions as quickly as possible. Working with the vendor, we pushed out an update to the affected 4G meters to still record data if a battery fails so we can read it manually (we’ll talk about what this means for bills in a few paragraphs).
In addition, when we realized last fall our 3G replacement effort would need to continue into 2023 we developed a plan with our vendor for them to manually read meters to help avoid estimated bills. They struggled to meet that contractual obligation early on, so we quickly deployed our own employees to help read and exchange more meters.
The good news here is we are on target to replace the remaining 3G meters on our system by the end of August 2023. We are also well equipped to continue replacing 4G meters if they fail.
Okay, let’s move on to the second topic, estimated bills.
Consecutive Estimated Bills
The MPSC has rules for utilities when it is not possible to read a customer’s meter or if the meter is not able to collect energy use data. Specifically, we need to make a reasonable effort to avoid more than two consecutive estimates and get an accurate meter read at least once every 12 months.
Due to the need to replace 3G compatible meter with 4G meters, and to low manual reads from our meter vendor, we knew more people would see estimated bills than we initially hoped. We started communicating with customers who could be impacted to let them know what to expect, including impacts to their individual energy programs and services. The messages included instructions for how to send us a photo of their meter’s digital display so we could send them a bill for their actual use and their payment options, if they had back-to-back estimated bills and a balance after we got a meter read of their actual use. We’re pleased to share the way we calculate estimates held up to the demands of this increased volume and 91% of estimated bills did not need to be corrected after obtaining actual meter readings.
For the customers who had meters that needed to be replaced this year, there were some energy program impacts with potential financial implications. We set up changes that benefitted these customers until their meter could be exchanged, including:
- Starting on June 1, customers paid the off-peak summer rate since we couldn’t read their meter during peak hours of 2-7 p.m. from Monday to Friday when electricity is more expensive to provide.
- Our demand response programs rely on a meter connection to manage participation and rewards. Customers with 3G meters who had enrolled in these programs continued receiving their incentives, even though we couldn’t verify they lowered their electric use during events.
- Our PowerMIDrive participants charging times could not be verified, so they were charged at the lower off-peak rate.
It is important to note that once their meters are changed, these customers can expect their bills, programs and incentives to work as they normally would.
Our goal is to minimize the negative impacts to our customers through this process. Our system flags bills that seem out of line for a customer’s historical use so we can investigate and make corrections. If we can’t complete an update before they get the bill, we work with them to make sure they are charged fairly.
Okay, moving on to issue three, new service installations.
New Service Installation Delays
Electricity and natural gas providers around the country, including Consumers Energy, had delays of other materials needed to connect new customers. As construction picked up post-pandemic, it became hard for material suppliers to keep up with requests. Knowing project delays are frustrating and even costly, we tried to keep customers informed when they made requests and throughout the planning process. In addition, the MPSC sets a standard for us to complete 90% of new service installs within 15 days of being notified site and project prerequisites, such as permits, are met.
On the electric side, we were hit the hardest with transformer and cable lead time. For transformers alone, the time it took from when we ordered a new transformer to when it was delivered increased by 43% from 2020 to 2022. To further complicate things, our primary transformer vendor canceled our existing orders in May 2022, requiring us to quickly find alternatives that met our standards. Underground and overhead cables lead time also has doubled since 2020 as construction work increased post-pandemic, adding even more complexity to our ability to install new or upgrade existing electric service.
We established new contracts with different global suppliers to increase and diversify our electric material sources, including with a transformer refurbishing manufacturer, and have been able to increase our inventory.
On the other side of the business, some natural gas service installations are installed with electric service. This meant even though we had the material needed to do the gas work, some jobs were still delayed due to the electric supply shortages. We also had a hard time getting larger natural gas meters typically used on larger buildings or to install whole-home generators.
On some projects we were able to redesign the specifications to use smaller meters where it would be safe to do so. We also established relationships with additional natural gas meter suppliers and changed our order procedures to better meet demand.
These measures have greatly reduced the number of projects experiencing delays. Electric new service installation installed within the 15-day window improved from 43% of customer requests in January 2023 to over 90% of customers installed within this window for June and July 2023. The average age of backlog of past due electric orders has decreased 57% from an average age of 40 days in the beginning of 2023 to an average age of 17 days as of July 31, 2023. The Company made similar improvements for gas new service installations, with over 90% of customers being installed within the 15-day window for June and July 2023, compared to 72% in January 2023.
We are disappointed we were let down by vendors that we depend on to serve our customers and are taking our role in making this right very seriously. We have learned a lot from this experience. We like to run our business lean to provide the best value for customers and are very deliberate in our processes to ensure we don’t carry excess inventory. However, we have made significant improvements to avoid situations like this in the future and will continue to evaluate our standards to serve our customers better – while still ensuring we are keeping customer costs as low as possible.
We are working to increase our communications and transparency. With 8,000 co-workers in Michigan, it’s a good bet the majority of those we serve are a friend, family member, neighbor or even one of our own! We know customers count on us to power their lives and want them to trust us to do just that. Serving our state is a big responsibility – one we’re proud to have – and we will always work hard to do it more reliably, safely, affordably and with cleaner methods.