Just before the holidays, the Michigan Public Service Commission (MPSC) issued one of their most notable decisions of 2021: they approved a rate increase for customers of Consumers Energy’s electric utility that was 88% lower than the company initially requested.
That is a truly significant change, and CUB was glad to see that much of the reduction was from cuts that we had proposed in testimony filed jointly with Michigan Environmental Council, Natural Resources Defense Council and the Sierra Club, as well as cuts proposed by other intervening groups such as the Attorney General. At the same time, on less positive notes, the MPSC also rejected some of our proposals to tie Consumers Energy’s distribution grid spending to clear performance targets so ratepayers have better assurance their money is being spent wisely. In addition, while the rate increase is much lower than it could have been, it is still nonetheless a rate increase, and one that comes at a time when residential rates have been climbing for years despite Consumers Energy customers receiving highly unreliable service compared to the service provided by utilities in the rest of the country.
Now, let’s quickly go over some highlights from this decision:
- The 88% reduction is based on the overall rate increase for all customer classes. For residential customers specifically, rates will go up 1% ($20.58 million), compared to the 8.8% hike Consumers Energy had requested.
- The rate increase was lower than expected because the MPSC disallowed the utility’s requested spending on a number of issues. For example, the MPSC decided to cut a portion of the utility’s spending on high-voltage distribution lines on the grounds that the utility’s plan was not detailed and specific enough. The intervening groups supported testimony from Robert Ozar, a consultant with 5 Lakes Energy, who explained how many of the utility’s assumptions in the plan were generic, and his testimony provided some of the evidence the MPSC needed to make its decision.
- We wrote about testimony from Mr. Ozar extensively earlier this year, especially regarding his concerns that Consumers Energy is not making cost-effective investments into its distribution grid. Fortunately, as described in the MPSC’s order, Consumers Energy has agreed to look into the Distribution Fault Anticipation technology that Mr. Ozar described in his testimony.
- The MPSC also agreed with intervening groups to disallow millions of dollars in spending on upgrades at the Campbell coal-fired plant. We argued these costs could be avoided by retiring the plant earlier than previously planned, and, indeed, this year Consumers Energy said it would retire the plant in 2025, six years sooner than it had said before.
- But the MPSC did reject our proposal that Consumers Energy should put forth a plan in which their distribution grid investments would be tied to performance-based regulation. The MPSC contends that they are considering performance-based regulation in other dockets, so they need not deal with it here. CUB disagrees. We argue that all of these cases are connected and that the utilities need to start planning now for performance-based targets.
There is good news here, but again, it is still a rate increase for residential customers. As CUB Executive Director Amy Bandyk was quoted as saying in a recent Bridge magazine article, “there is a long-term and troubling trend of Michigan residential customers frequently having to deal with long power outages due to poor utility service and still getting hit with rate increase after rate increase while industrial rates have stayed flat.”