Michigan PSC approves low-interest securitization bonds for Consumers Energy
The Michigan Public Service Commission (MPSC) took a series of actions on Consumers Energy Co. this week, approving up to $677.7 million of low-interest securitization bonds for costs of two retiring coal plants and a $100 million increase on electric rates for reliability efforts.
For the securitization bonds, the money is in qualified costs related to the unrecovered book value of Consumers’ Karn 1 and 2 coal-fired generating units at a Saginaw Bay complex. Both units will be retired in May 2023 to help reduce the company’s carbon emissions. An additional $10.6 million has also been approved for other qualified costs linked to the effort. The securitization bonds will, overall, allow Consumers to replace higher-cost debts and equity with lower-cost debt.
According to its estimates, Consumers predicts the approval will allow its customers to save around $126 million. These savings will be seen in the form of bill credits once the bonds are officially issued. The bonds will extend over an eight-year term, with quarterly reports from Consumers issued until all bond proceeds have been disbursed.
Additionally, Consumers will now be able to increase its electric rates for customers by $100 million, though this is less than half of what it had requested of the MPSC. Meant to fund replacement and modernization efforts for Consumers’ electric distribution system infrastructure and to help it eliminate coal-fired electricity generation and reduce carbon emissions, the rate increase was paired with a return on common equity of 9.9 percent. This sets the company’s equity ratio at 51.11 percent overall.
For the average residential customer, this will take the form of an additional $9.17 per month.
