Michigan PSC approves $235.8M securitization of costs for retirement of DTE’s River Rouge plant, tree trimming
DTE Electric Co. was authorized by the Michigan Public Service Commission (MPSC) this week to securitize bonds of up to $235.8 million to cover the retirement of its River Rouge coal plant on the Detroit River, a surge of tree trimming, and other qualified costs.
River Rouge has been in operation since 1958, but as the transition to clean energy picks up pace, DTE has opted to decommission the facility. This is expected to take up to $73.2 million, but the bulk of funds authorized by the Commission will go toward the ongoing tree trimming surge in Michigan. Funding for that could reach $156.9 million as of June 30, 2021. With securitization, the utility will replace existing debt and equity with lower-cost debt via securitization bonds, resulting in lower costs for ratepayers overall.
The action should save ratepayers more than $27 million, but they will see two separate securitization charges added as line items to their bills going forward. The charge linked to DTE’s tree trimming surge will be billed to customers over a period of no more than five years. It will be recovered from all electric distribution customers, while the power supply securitization charge for the River Rouge plant will be billed only to power supply customers over a period of no more than 14 years.
Surcharges will be reviewed annually and watched for any under or over collections.
