In a couple of days, the heating season will end, which means that some people who hadn’t been able to pay their electricity and gas bills will get their power shut off. Who cares if winter continues beyond that? Not DTE Energy, stock symbol NYSE:DTE. At least DTE won’t cut anyone’s power during the heating season. See, the company’s not completely heartless!
The energy company just announced $1.02 dividends on each share of their stock a couple of weeks ago. That’s more than Enbridge dividends (Enbridge is the Canadian energy company whose unsafe Line 5 light crude oil pipeline could destroy the Great Lakes). And then, just a couple of days ago, this happened. Arpan Lobo for the Detroit Free Press:
On Thursday, [March 28, 2024,] Detroit-based DTE filed a rate increase request with the Michigan Public Service Commission (MPSC), asking the panel to sign off on a $456 million rate increase for its electric customers. If the full rate increase was approved, it would be about an $11 increase for the average monthly residential bill. DTE officials have said the rate increase is needed to invest in its grid and improve service reliability.
Okay, sounds reasonable.
But, um, didn’t DTE ask for a rate increase back in December? Yeah. And what was the reason for that rate increase? According to a press release from the MPSC,
Among the highlights of today’s order, the Commission approved a 2-year investment recovery mechanism (IRM) that is designed to help track investments in DTE Electric’s distribution system and ensure continued investment in the distribution grid to improve reliability and resilience. These investments totaling more than $350 million will be made in 2024-2025 toward circuit conversions, sub-transmission redesign and rebuild, breaker replacement, underground residential distribution replacements, and 4.8 kilovolt (kV) circuit automation.
That sounds an awful lot like “invest in its grid and improve service reliability.”
The real reason for this latest rate increase request is probably to raise shareholder dividends and maximize executive compensation. Probably the same reason for the December rate increase.
But the majority of DTE shareholders are “institutional” investors, e.g., mutual funds. I doubt most mutual fund holders would notice a couple cents fewer from DTE dividends on their statements. DTE could take 2% of profits and just use that to pay off poor elderly customers’ bills. Maybe announcing such an initiative will be DTE’s April Fool’s prank.
NYSE:DTE closed at $111.30 a share yesterday. Last I checked, the stock was almost up a dollar in after hours trading.