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DTE, Consumers Energy report higher 2nd quarter earnings as power outages are repaired

Michigan's two largest utilities — DTE Energy and Consumers Energy — reported second-quarter earnings Thursday as about 178,000 utility customers across the state woke up without power after storms damaged cars and homes and took out utility lines.

Consumers Energy is quickly restoring service to its approximately 20,000 customers without power, Garrick Rochow, president and CEO of the Jackson-based utility, told analysts on the company's second-quarter earnings call Thursday.

About 155,000 DTE customers were without power Thursday morning. DTE's Chairman and CEO Jerry Norcia said nearly 3,000 employees mobilized to address the storm conditions and that work will mostly wrap up in the next couple of days.

A large portion of a tree landed on a house on Hilton Drive in Southfield after heavy storms swept through the area on Wednesday, July 26, 2023.
A large portion of a tree landed on a house on Hilton Drive in Southfield after heavy storms swept through the area on Wednesday, July 26, 2023.

DTE reported a net income of $201 million in the second quarter of 2023 compared with a net income of $37 million in the second quarter of 2022. Operating earnings for the second quarter 2023 were $206 million compared with operating earnings of $171 million in 2022.

Consumers Energy's parent company CMS Energy reported a second-quarter net income of $198 million in the second quarter compared with a 2022 net income of $148 million. The company reported operating earnings for the second quarter of $244 million compared with $239 million in the same quarter last year.

Here's what company executives had to say on other subjects as they answered questions from analysts Thursday:

About Wednesday's storms

Rochow said the utility performed well after 65-mph winds hit Consumers Energy's service territory.

"The investments we're making are certainly showing benefit," Rochow said. "I feel good about our performance this summer. I will continue to be focused on it."

Norcia characterized Wednesday's storms as fairly typical for July and August and said the restoration costs were ordinary for this time of year.

However, the Detroit-based utility said it faces a $200 million headwind that the company attributes partly to the restoration costs associated with the February ice storm and March winter thundersnow that knocked out power to hundreds of thousands of homes and businesses across Michigan. It also faces headwinds from a warmer winter and cooler spring, which means customers use less power, among other factors.

On Consumers Energy's undergrounding project

Consumers Energy gave an update on an undergrounding pilot program it announced earlier this month. Rochow said the utility will start the project of burying power lines in about two weeks in an area north of Grand Rapids.

"We know how to do this work," he said. "In practice, we have a large gas business that does a lot of undergrounding. So we're sharing practices back and forth."

The plan is to move about 400 miles of power lines underground annually. About 15% of Consumers Energy lines are currently underground, mostly in subdivisions and areas with high population density.

In terms of costs, he said undergrounding is "almost at parity with aboveground construction."

On DTE's pending request to raise rates

In November, the Michigan Public Service Commission, the state board that regulates the utilities and approves rate increases, authorized a $30.5 million rate increase for DTE's electric operations, a significant reduction from the $388 million rate increase the utility had sought. A few months later, in February, the utility filed a new request for a rate increase of about $620 million.

"We have started some conversations and those conversations, obviously, will become a lot more intense through the summer," Norcia said. "I believe we have the ingredients for settlement."

He said DTE's target is to settle the rate case in mid-October.

On malfunctioning gas meters

Earlier this month, the MPSC said it had launched an investigation into Consumers Energy after receiving numerous complaints from customers about malfunctioning natural gas meters, potential overbilling due to extended estimated meter readings and delays in new service installations.

Rochow gave some context to the meter issue saying as wireless carriers were transitioning from 3G to 5G, the utility was working with its meter vendor to upgrade those meters. He said the meter vendor ran into supply chain problems, delaying the deployment of the upgraded meters.

In January, Consumers Energy had about 190,000 meters that were no longer communicating, and thus creating the potential for estimated reads. Today, he said, there are about 33,000 meters that need to be fixed and he expects that will happen in August.

More on the investigation: State to investigate Consumers Energy after receiving complaints of malfunctioning meters

How the market reacted to earnings news

Both companies reaffirmed their earnings per share guidance for the year but still both stock prices fell slightly.

DTE's stock price dropped 1.25% Thursday to $114.42. Consumer Energy's stock price also declined, down 2.87% to $61.60 Thursday.

Contact Adrienne Roberts:

This article originally appeared on Detroit Free Press: DTE, Consumers Energy report higher 2nd quarter earnings