Approved return on equity: 9.9% (10.5% originally requested by the utility)
Approved residential rate increase: 9% (18.5% requested)
Approved revenue requirement increase: $144.5 million for the period Oct. 1, 2020 to September 30, 2021 ($245 million requested). Part of the decline from $245 million is due to $84.5 million in accelerated amortization of deferred liabilities related to tax cuts for the period October 1, 2021 to September 30, 2022.
On Aug. 20, a settlement agreement was reached between Consumers Energy and several parties to this case including the Citizens Utility Board of Michigan, and the MPSC approved the settlement on Sept. 10. Besides the significant reductions to the rate increase and other elements of the rate case as mentioned above, other provisions of the settlement include:
- The utility will contribute $2 million to The Heat and Warmth Fund and other nonprofits that provide energy assistance to utility customers, and this amount will be borne by Consumers Energy shareholders, not ratepayers.
- Consumers Gas will explore a pilot program to provide more assistance to low-income customers, particularly those at or below 150% of the federal poverty level.
- Consumers Gas’s fixed, monthly customer charge will be increased from $11.75 to $12.60, instead of increasing to $13.75 as the utility had initially requested.
- The parties to the settlement agreement are Consumers Energy, the staff of the MPSC, the Attorney General of Michigan, the Association of Businesses Advocating Tariff Equity, the Retail Energy Supply Association, Michigan State University, the Lansing Board of Water and Light, Energy Michigan, Inc., the Residential Customer Group, the Midland Cogeneration Venture Limited Partnership and CUB. Michigan State University and the Lansing Board of Water and Light were not signers of the agreement but made statements of non-objection.
Here are a few things we think are important for you to know about this case if you are a Consumers Gas customer:
- Consumers Gas originally requested an 18.5% average increase in residential rates, and ultimately received 9%. In its last rate case, U-20322 (decided in September 2019), the utility requested a 16.7% increase but only received 7.6%.
- The biggest piece of the $245 million in requested additional revenue (ultimately reduced to $144.5 million) was $124 million from infrastructure investment.
- Consumers Gas proposed to increase its fixed monthly customer charge from $11.75 to $13.75. That increase would have made Consumers Gas’s monthly charge the highest of any gas utility in Michigan, based on December 2019 data from the MPSC.
- The 10.5% requested return on equity is up from 9.9% approved in the previous rate case. The utility had requested 10.75%, but received 9.9%.