On October 15, the MPSC issued a ruling in response to a gas service rate increase request from Consumers Energy (U-21981). The amount of the increase was reduced significantly after effective analysis and advocacy by The Citizens Utility Board of Michigan (CUB) and other consumer advocacy organizations.
CUB joined the Michigan Environmental Council in advocating for affordability, prudent infrastructure investment and stronger long-term gas-system planning. While the Commission’s decision will allow residential rates to rise 4.3% on average, this amount is far less than the 8.2% hike sought by Consumers. Overall, Consumers Energy sought a $231.476 million annual increase by the briefing stage, while the Commission authorized $139.176 million, reducing the requested increase by approximately $92.3 million annually, or 39.9%.
CUB also effectively redirected significant investment to achieving the state’s climate transition plans by reducing investment in long-lived new gas systems, focusing instead on maintaining existing assets and cutting poorly justified requests.
While CUB’s work helped persuade the Commission to sharply reduce the rate hike Consumers sought, it should be noted that the MPSC is allowing Consumers to increase its gas rates at a pace that exceeds the general inflation and outpaces average gains in household income.
The approximately 4.3% residential rate increase substantially exceeds the projected increase of consumer prices, which are expected to go up approximately 2.9% from November 2025 through October 2026. This means the approved residential rate increase is about 1.6% above core inflation. We expect this to result in an overall increase in the average household energy burden, a term for the percentage of household income dedicated to energy costs. This trend could prove to be financially unbearable for some Michigan families.
The increase also indicates that Consumers isn’t managing costs effectively despite facing little change in technology, innovation, or the size and composition of its market. Continuing to invest heavily in natural gas systems also undermines Michigan’s climate commitment, which will require sharp reductions in natural gas use over the next two decades. CUB calls on the Commission to square its regulatory decisions with the realities of customer affordability and climate change.
CUB recommended an 8.88% return on equity (ROE) and 50% equity capital structure, sought reductions to rapidly growing pipeline replacement programs, pushed for greater consideration of alternatives to pipeline replacement, and challenged several operating expenses. CUB also advocated for more realistic projections of new gas connections, safeguards against existing customers subsidizing new connections, and expanded analysis of future gas demand and asset utilization in Consumers Energy’s Natural Gas Delivery Plan.
The Michigan Public Service Commission adopted several policies consistent with CUB’s recommendations. Most notably, the Commission found that cost containment was necessary for Consumers Energy’s Enhanced Infrastructure Replacement Program and capped test-year spending at $207 million, below the company’s proposed $234.2 million. CUB had recommended an even lower spending level and later supported a larger reduction proposed by the Attorney General. The Commission also approved substantial reductions to the Vintage Service Replacement program, including a $32.11 million test-year reduction, after CUB argued that Consumers’ accelerated spending was insufficiently supported by historical performance and warranted greater consideration of alternatives. The Commission also maintained the 50/50 capital structure supported by CUB, although it retained a 9.80% ROE rather than adopting CUB’s proposed 8.88%. The lower ROE would have saved Consumers Energy customers about $50 million annually.
CUB’s advocacy also produced important long-term consumer protections. The Commission rejected Consumers Energy’s assumption that new gas connections would remain flat at 5,950 annually through 2035, finding that projection unsupported by the record, and required the company to update its forecast and study recent connection trends. Consumers must also analyze gas consumption, asset utilization, future throughput and customer counts in its revised Natural Gas Delivery Plan and, in its next gas rate case, update its contribution-in-aid-of-construction assumptions and propose solutions for any subsidization of new customers by existing customers.
These requirements closely align with CUB’s effort to ensure that long-lived gas investments reflect changing demand and do not unnecessarily burden existing customers.