Michigan’s Energy Waste Reduction Programs Expected to Save $1.4 Billion for Utility Customers

The Michigan Public Service Commission or Oct. 25 released a report on the state’s Energy Waste Reduction, EWR, programs, finding that EWR efforts could generate up to $1.4 billion in cost savings for utility customers over the 12- year lifecycle of these programs. The cost savings are a result of a decrease in demand of over 1.75 million megawatt hours (MWh) of electricity and almost 7 million thousand cubic feet (Mcf) of natural gas.

These programs offer residential customers ways to cut down energy waste and improve energy efficiency, ultimately leading to reduced demand and cost savings. Utilities spent over $551 million on EWR programs in 2023, according to the report. For each dollar spent on these programs in 2023, customers receive $2.54 in benefits.

Michigan’s Energy Waste Reduction standard, established under Public Act 295 of 2008 and updated by subsequent legislation in 2016 and 2023, mandates that all natural gas and electric utilities implement programs aimed at reducing energy consumption. These programs target specific reductions to lower future service costs for utility customers. The 2023 law, also known as Clean And Renewable Energy And Energy Waste Reduction Act, set revised annual energy savings targets for electric utilities of 1.5 percent of their total retail sales from the previous year, and 0.0875 percent for natural gas utilities.

EWR programs lead to reduced energy waste for customers through methods such as improved heating, lighting, ventilation, and appliance recycling. By reducing consumption, the programs can save money in two ways: by prolonging the construction of new expensive power generation systems and reducing the impact of higher fuel costs.

The programs particularly benefit low-income communities, helping to reduce the burden of expensive energy bills and improving community health. The commission’s EWR Low Income Workgroup brings together state agencies, community organizations, and utilities to design energy waste reduction initiatives for low-income groups. In 2023 utilities spent around 20 percent of the program’s budget, amounting to $142.5 million, on initiatives for low-income communities.