Approved return on equity: 9.9% (10.5% requested by DTE in its original filing)
Approved revenue requirement increase: $110 million ($203.8 million requested)
Approved residential rate increase: 3.9% (8.3% requested)
Events
- On Aug. 20 the MPSC approved a settlement agreement reached the previous month between DTE Gas and the following parties: the staff of the MPSC, Attorney General Dana Nessel, the Association of Businesses Advocating Tariff Equity (ABATE), Detroit Thermal LLC, Citizens Utility Board of Michigan, Michigan Power Limited Partnership (MPLP), Verso Corporation, and the Retail Energy Supply Association.
Major elements of the settlement agreement include: a reduction in the revenue requirement increase to $110 million from $203.8 million and a reduction in the return on equity to 9.9% to 10.5%. Also, DTE Gas will no longer seek a $13.9 fixed monthly customer charge, and instead will charge $12.25, an increase from the current charge of $11.25.
- CUB submitted that DTE uses inconsistent time periods as the bases for its forecasts of gas volume. The result is that DTE tends to pick the timeframe that supports a larger rate increase. We call for a consistent timeframe to be used to support forecasts. CUB also opposed changes to rates that would shift additional burden from larger customers onto residential and small business customers. Those changes, proposed by ABATE, MPLP and Verso, were not included in the settlement.
- The office of the attorney general (AG) had argued that DTE’s revenue deficiency is no more than $65.5 million, rather than the over $200 million DTE was claiming. The AG’s initial brief reviewed how DTE Gas’s capital expenditures have been rising swiftly over the past several years, and how this spending places a “burden” on ratepayers. While admitting that that some of these capital expenditures are necessary to replace aging infrastructure, the “Company has intensified the pace of replacement of pipelines and other facilities without sufficient engineering analysis to support the increase in capital expenditures,” the AG argued. If these expenditures continue and customers keep paying for them in their rates the way they have been, the average total annual residential bill will double over the next ten years, from $691 in 2020 to $1,492 in 2030, according to the AG.
- The AG also asked that the return on equity be reduced to 9.5%.
- On May 27, 2020, the Citizens Utility Board of Michigan filed its initial brief in this case. CUB argued against the Association of Businesses Advocating Tariff Equity (ABATE), which represents large industrial customers, and ABATE’s proposal to allocate costs in a way that would decrease the share of costs carried by industrial customers, but increase the burden for residential and small business customers. In testimony CUB showed that Michigan is already similar to neighboring states in the Midwest in terms of industrial rates, so there is not a gas rate problem for Michigan’s ability to competitively attract or retain industrial customers.
Here are a few things we think are important for you to know about this case if you are a DTE Gas customer:
- DTE Gas is requesting an 8.3% average increase in residential rates, compared to 11.1% in its last rate case U-18999 in 2017. The MPSC, however, ultimately approved DTE Gas for just a 0.2% average residential rate increase in U-18999.
- DTE Gas had also requested a 10.5% return on equity in the last rate case, but only received 10%.
- The utility says that much of the additional revenue is related to upgrades in its natural gas distribution system, including those made toward DTE’s goal of reducing methane emissions by 80% by 2040.
- DTE Gas proposes increasing its fixed monthly customer charge for residential customers from $11.25 to $13.90.