When discussing the topic of utility companies, I often get asked, “Why don’t we break up the monopolies and let companies compete for distribution?” This is a great question, because this is how other network services like cell service and broadband function.
 

When it comes to energy, however, scale makes a monopoly model more practical. Under the current system, there is only one set of the poles, wires, and transformers that physically connect your house to the grid. "Competition" would mean a second and third set of poles down every street. This would make any crisis response a nightmare. When an ice storm knocks out power to 400,000 homes at 2 o’clock in the morning, you want one company with every truck in the state under one dispatcher, not three companies guarding their own trucks and arguing over whose block comes first.
 

The problem is not the existence of the monopolies themselves—it’s the flawed incentives we’ve set for them. Michigan’s current model for regulating utility rates is a cost-of-service model. In this system, the utility spends money on the grid, and the MPSC grants it a fixed return on that spending (i.e., a fixed return on equity).⁴ That means the utility makes the same return regardless of how much time you spend without power.
 

We can change this. In a performance-based model, the MPSC sets measurable targets for outcomes such as power restoration times, outages per customer, and cost per customer against peer competitors. If the utility manages to beat the target, it earns a higher return on equity. But if it falls short, return on equity is reduced or customers are entitled to refunds. Michigan took its first step toward this model in 2025, but the MPSC capped the total incentive and penalty at $10 million for 2026.⁵ Against $1.4 billion in profits, that is barely a rounding error. I propose significantly increasing this cap.
 

Some may call this micromanagement. It is the opposite. Micromanagement is what we do now: the MPSC spends a rate case litigating whether DTE’s tree-trimming budget is prudent, line by line, for months. A performance-based approach stops telling DTE how to do its homework and starts grading its test results.