In 1873, the Michigan Legislature established the Michigan Railroad Commission, with a single Commissioner, to regulate railroad rates and conditions of service. The Legislature expanded the Commission to a three-member body in 1909, to regulate rail and electric rates and conditions of service. The MRC's authority was extended to include telephone service in 1911.

In 1919, the Michigan Railroad Commission was abolished and replaced by the Michigan Public Utilities Commission, comprised of five members. Each member served four year terms. Public Act 419 of 1919 gave the MPUC authority to regulate steam and natural gas, expanding to water carriers (ferry services) in 1921, natural gas pipelines through Public Act 9 of 1929, petroleum pipelines through Public Act 16 of 1929, and motor carriers through Public Act 254 of 1933.

The Michigan Public Utilities Commission was abolished in 1939 and the Michigan Public Service Commission MPSC was established, a five member panel with each member serving a five-year term. The Legislature reduced the body to a three member panel in 1947, with members serving staggered six-year terms. At that time, the Legislature imposed the first political restrictions on Commission members since the Railroad Commission had been abolished. MPSC members were prohibited from serving as officers or committee members of any political party organization. In 1951, the Legislature passed Public Act 275, which required that not more than two Commissioners may represent a single political party.

The MPSC first established Gas Safety Standards in 1957, prescribing safety requirements for pipeline facilities used to transport natural gas. In 1969, the Legislature passed Public Act 165, providing for enforcement and penalties. Periodic revisions and updates over the past forty years have kept Michigan's code current with federal and state legislative requirements and safety standards.

Water utilities came under MPSC jurisdiction through Public Act 19 of 1967. Commission jurisdiction over these utilities was repealed by Public Act 246 of 1995.

In 1968, the MPSC assumed duties over administration and enforcement of the size, weight, and load of motor carriers from the Department of State Highways. Executive Order 1982-1 transferred the Motor Carrier Enforcement Division to the Department of State Police. The Michigan Legislature amended the Motor Carrier Act in 1982, removing certain constraints on competition and permitting motor carriers to raise or lower rates without Commission approval. The Commission maintained regulatory authority over the rates and services of motor carriers of household goods.

Governor James J. Blanchard merged the Energy Administration of the Michigan Department of Commerce with the MPSC, through Executive Order 1986-17, with the intent to strengthen the regulatory and non-regulatory energy planning, policy and program capabilities for Michigan. The merger also consolidated Michigan's responsibility for energy-related programs within the MPSC.

In 1991, the Michigan Legislature passed the Michigan Telecommunications Act (MTA), in an effort to improve opportunities for economic development and promote customer choice. The MTA, amended in 1995 and 1997, revamps the MPSC's role in telecommunications regulation and is designed to promote competition in the marketplace. More than sixty companies have been granted licenses to provide basic local telephone service in Michigan, and 30 interconnection agreements between local telephone service providers have also been approved.

A number of changes occurred at the MPSC in 1996. The Commission implemented a new organizational structure, initiated as a result of recommendations by Governor John Engler, designed to streamline operations and improve the competitiveness of Michigan's utility industries. Through the reorganization, the Commission consolidated the functions of six existing divisions into three operating divisions - electric, natural gas and communications. Additionally, Governor John Engler transferred the energy program functions from the MPSC to the Department of Consumer and Industry Services, formerly the Department of Commerce. The Department created a State Energy Office to administer these programs.

Since the late 1990s unprecedented changes in utility regulation have occurred in Michigan. The Commission continues its support for greater customer choice in the electric, natural gas and telecommunications industries and increased reliance on market forces to support that choice. Natural gas customer choice programs were approved for the four largest natural gas companies in Michigan, Aquila Networks - MGU, Consumers Energy Company, Michigan Consolidated Gas Company, and SEMCO Energy Gas Company, and more than 350,000 Michigan customers have already begun exercising their right to choose an alternate natural gas supplier. The Commission also approved a phase-in of customer choice programs for customers of Detroit Edison and Consumers Energy companies.

Michigan's Customer Choice and Electricity Reliability Act (2000 PA 141) took effect in June, 2000. This new law directed the MPSC to issue orders that gave all customers of Michigan's investor-owned utilities the ability to choose an alternative electric supplier, starting in January 2002. (Michigan member/customer-owners of cooperative electric distribution companies and customers of municipal electric utilities are on different implementation schedules.) This legislative action culminated a process of electric utility industry restructuring that the MPSC had already been working on for several years. Michigan's electric industry has now been restructured so that the generation and supply of electricity is now open to competitive suppliers. The electric transmission and distribution businesses remain under a regulated monopoly utility structure. This law defined a new type of entity, called "alternative electric supplier" ("AES"), and gave the MPSC authority to license them. Since the law was passed, the MPSC has issued literally dozens of new orders to implement the various provisions. By the middle of 2002, over 4500 customers representing nearly 1500 megawatts of electric power demand had already enrolled in customer choice programs offered by Michigan electric utilities, and licenses had been granted to 20 competitive suppliers.