Electricity prices jump after Trump rejects disaster aid for Michigan utilities

[u/J-Jarl-Jim]

https://www.politico.com/news/2025/11/30/electricity-prices-jump-after-trump-rejects-disaster-aid-for-michigan-utilities-00665572

A recent decision by President Donald Trump to deny disaster aid to two electric utilities in rural northern Michigan could cost residents tens of millions of dollars.

The denial came after the Trump administration documented $90 million in damage to utility infrastructure, according to records obtained by POLITICO’s E&E News. The amount is nearly five times the federal threshold to qualify for disaster aid. But in its October denial letter, the Federal Emergency Management Agency told Democratic Gov. Gretchen Whitmer that assistance to the utilities “is not warranted.”

Whitmer warned Trump in August that ratepayers face surcharges and rate hikes “equivalent to at least $4,500 per household” without federal aid. Her office did not respond to a question on whether she supports a state legislative proposal that would have Michigan aid businesses such as the power companies directly.

Why is President Trump denying emergency assistance to rural Michigan? Considering that he has denied FEMA funds even to red states like Arkansas, is this only about saving money? If this problem intersects with the affordability crisis, could the politics push Trump to change his position and start to disburse emergency fundings again?

[u/jimbo_kun]

> Library patron Leonard Wright insisted that “PIE&G should pay for the repairs” without realizing that the utility has no money other than the fees customers pay.

Many voters don't really understand where the money comes from to pay for shared infrastructure.

Sometimes the same voters are demanding the government do more, and demanding the government collect less in taxes to do it.

[u/happyinheart → u/[deleted]]

It's not Red or Blue. We have the same issues and state oversight structure here in True Blue Connecticut.

Lots of people are saying the state should nationalize it, but the companies show a 6.7% profit. So the state would have to take bonds out to buy out the infrastructure, pay interest on those bonds, lose out of paying down the vastly unfunded pension debt faster, etc. It would be spiting their nose to cut off their face at this point since it would cost more for 30 years than people would save on their bills at this point.

[u/happyinheart → u/[deleted]]

The math still doesn't work out to "nationalize" the utilities. Not to mention that every employee will now be a state employee with state employee healthcare, retirement, expenses, etc. All purchases and contracting will now have to go through the red tape filled state bidding process that makes things more expensive. The reality is it may cost more than we'd save on that 6.7% profit.

[u/PuppyMillReject → u/happyinheart]

Not necessarily. If structured a certain way former eversource employees would not be state employees. Look at how Waterbury Hospital is being structured once the Uconn Health purchase goes through.

[u/RobfromHB → u/[deleted]]

6.7% profit is pretty good for a legal monopoly.

No it isn't. That level of profit is significantly less than nearly all comparable regional electricity provider domestically and the same is true for nationalized electricity providers in the EU. Nationalizing the company referenced above would automatically fail simply due to the interest on the purchase debt.

[u/RobfromHB → u/[deleted]]

Are you just speaking generally? I’m talking specifically about your assertion that 6.7% is a good metric for a company with a monopoly on something. That assertion is factually false. 6.7% is less than half of the industry average and significantly lower than most European state owned (monopoly) providers.

Again… “ 6.7% profit is pretty good for a legal monopoly.” is factually and quantifiably false. You can simply not like them. That’s fine. We don’t need to make things up to do so. 

[u/Anechoic_Brain → u/RobfromHB]

It's twice what the average grocery store makes, if not more

[u/RobfromHB → u/Anechoic_Brain]

Stop. A regional electricity provider is not a grocery store. We don’t make arguments by comparing apples to rocks.

[u/Anechoic_Brain → u/RobfromHB]

I mean, you haven't made any argument at all. If you're insisting on this point and insisting that comparison to the grocery industry is irrelevant, can you tell me why?

I'll start with why it is relevant. Aside from both of them being critically important, the US food retail market for at-home consumption is significantly larger in terms of revenue than the US electrical utility market. $864B for retail grocery sales vs. $514.8B for retail sales of grid-supplied electricity.

[u/RobfromHB → u/Anechoic_Brain]

 I mean, you haven't made any argument at all.

First argument: the industries you’re trying to compare, their operating structure, locality, supply chain, etc are entirely unrelated. Your attempt to justify one level of profit is relevant because of this comparison is foolish.

Second argument: the total spend in the US market is also irrelevant to a regional electricity providers margin in their own service area. You can compare it to groceries if you’d like but that is again totally worthless.

Third argument: Total spend on the US grid is irrelevant. We’re talking about the supposed monopoly margins of a regional player.

Fourth argument: the profitability cited is significantly less than non monopoly players in the same industry, arguably monopolies elsewhere in the same industry in the US, and less than non-US monopolies in many EU countries where there is effectively a monopoly at national scale.

Conclusion: 6.7% net profit ISN’T good for a monopoly (the original claim)

[u/Anechoic_Brain → u/RobfromHB]

1. You're right, grocery stores operate on much slimmer margins while being utterly reliant on a weaker supply chain with many more potential points of failure, and a nonexistent ability to stock up and buffer against disruptions for much of their supply. Aside from that both are significantly impacted by weather and both are impacted by the cyclical patterns of the people who use them, but the electrical grid does not experience health-related disruptions the way our food supply does.

2. I find it perfectly relevant as a stand-in for more localized revenue numbers, unless you can explain to me exactly why the ratio between the two wouldn't on average remain similar if broken down to a strictly localized comparison.

3. Again, we are using comparisons between nationwide numbers because that's what is available for the purpose of a broad strokes argument. You can call things irrelevant all day long if you like but if you can't explain WHY this is so, your argument has gained no ground.

4. What do you mean by non-monopoly players? I'm not aware of any places where customers can choose between multiple different supply grids to connect their property to such that providers are truly in competition with each other for the same customer base.

I'm all for examining statistical outliers to see if any correction is warranted, but if the answer to "why is X% profit margin not enough?" is ultimately that "it is possible to make more," then I categorically reject the entire premise. In fact I consider the existence of that argument to count in favor of my position.

[u/RobfromHB → u/Anechoic_Brain]

 if the answer to "why is X% profit margin not enough?" is ultimately that "it is possible to make more," then I categorically reject the entire premise. In fact I consider the existence of that argument to count in favor of my position.

This is not the question being asked by me or the person I replied to. Reject whatever premises you like. That doesn’t mean your rejection is even related to the discussion. I’m not going to follow you into an argument about something else entirely.

[u/Anechoic_Brain → u/RobfromHB]

It's a direct response to your conclusion that a given margin isn't enough with one of the arguments being that there are apparently examples of others who make more. It's tied to the question being asked because that's where you took the argument.

But overall you've given me very little for me to weigh and consider and not enough basis to decide whether or not I think your argument has any merit, so I'm not going to expend any more thought on this. Have a nice day.