MPSC approves both $143.5M rate increase and more than $1.6B refund for Consumers Energy customers
With the approval of the Michigan Public Service Commission (MPSC), gas rates are set to rise for customers of Consumers Energy Co.; however, both gas and electric customers will receive more than $1.6 billion in refunds from lowered federal corporate tax rates.
In all, Consumers will provide $1,174,181,000 back to its electricity customers and $451,588,000 for itas gas customers, to be amortized over periods of up to 44 years. This will take the immediate form of a $32,289,000 credit to electricity customers to cover the lead-up to new rates, leading to an average 68 cent reduction on residential customers’ electricity bills, starting this October. This effort marks the third and final round of bill adjustments made by the MPSC as a result of the Tax Cuts and Jobs Act.
“The Commission remains committed to making certain that utility ratepayers benefit from the savings that regulated utilities in Michigan will realize under the Tax Cuts and Jobs Act,” MPSC Chairman Sally Talberg said. “Our Staff continues its diligent work in ensuring every dollar of savings is quickly passed back to ratepayers.”
At the same time as the refunds were issued, the MPSC approved in a separate case a $143,531,000 rate increase for Consumers customers. For the average residential natural gas user, this should increase bills by around $5.48 per month, beginning in October.
Consumers had sought a rate hike as high as $229 million for its natural gas distribution rates, but that request was reduced. The new figure does factor in the refund issued under the Tax Cuts and Jobs Act changes. In turn, Consumers expects to use these funds to increase gas transmission and distribution infrastructure investments, accelerate the removal of at-risk lines made of dated materials and continue technology enhancements with regards to metering and customer-facing applications.
Consumers intends to align its Vintage Service Replacement Program (VSRP), under which the dated lines will be replaced, with the timeline of the MPSC’s Enhanced Infrastructure Replacement Program (EIRP). As of two years ago, there were still 172,000 vintage services still in use by the Consumers gas system. The MPSC adjusted spending on this after finding Consumers had failed to justify its spending habits. The remaining lines are expected to be replaced by 2036.
The MPSC also directed Consumers to create a strategic plan regarding long-term operational and investment needs to meet natural gas supply and delivery. Further, they want Consumers to develop and implement a Pipeline Safety Management System under the recommended practices of the American Petroleum Institute — an update to be included in their next general rate case.
Consumers has also been approved for three power purchase agreements under these latest decisions by the MPSC. While two are for continued power output from North American Natural Resources Inc. and Commonwealth Power Co. plants, to provide 1.6 megawatts and 0.8 MW, respectively, the third represents a new agreement between Consumers and River Fork Solar LLC, for 100 MW of energy, capacity and renewable energy credits from a solar facility in Albion, Mich.
