The Michigan Public Service Commission (MPSC) today authorized The Detroit Edison Company to increase its rates by $83,626,000 million.  It also began the process of realigning rates to attract more job providers to Michigan.

The average Detroit Edison residential customer will see an increase of $2.51 on their monthly electric bill.

"My fellow Commissioner and I took a cautious approach to safeguard ratepayers' interests in this rate case," noted MPSC Chairman Orjiakor Isiogu.  "We are keenly aware of the economic climate in Michigan and in Detroit Edison's service territory, in particular.  The result is an increase that is 71 percent below what the company requested.  Customers' can rest assured that they are not paying for executive bonuses, and they will be pleased that the Commission has instituted a line clearance tracker to carefully scrutinize Detroit Edison's tree trimming activities.  In addition, we are providing low-income customers with a way to offset part of the increase.

"Today's order also implements a rate realignment that will make Michigan more attractive to job providers," Isiogu added.  Public Act 286 requires that rates based on cost of service be phased in over a five-year period beginning Jan. 1, 2009.  "Mindful of the affect on residential customers, the Commission has limited that increase on them to 4.5 percent," Isiogu noted.   "That will result in a realignment of rates by 38.5 percent - significant progress that will allow the legislative mandates to be met."

After Jan. 1, 2009, the MPSC will continue this effort through an annual 1.7 percent realignment on October 1 of each year, beginning Oct. 1, 2009, unless modified by a future rate filing.

The company on April 13, 2007 filed an application with the MPSC requesting authority to increase its rates by $123 million.  It subsequently filed two changes that increased that request to $199 million and $284 million, respectively.

The fact sheet with details follows.

The MPSC is an agency within the Department of Labor & Economic Growth.

Case No. U-15244

Detroit Edison Company

Case No. U-15244

Commission Order Fact Sheet

1.       Commission Order Date:                December 23, 2008

2.       Revenue Increase Granted:             $83,629,000

3.       Rate of Return on Common Equity: 11.00%

4.       Debt to Equity Ratio:           51.225% Debt - 48.785% Equity

5.       Overall Rate of Return:                     7.16%

6.       Detroit Edison will implement a 38.5% realignment of residential rates on service rendered on or after the first day following the issuance of the order.

7.       After Jan. 1, 2009, Detroit Edison will implement a 1.7% rate realignment commencing on October 1, 2009 and file a tariff sheet reflecting the rate changes 30 days prior to implementation of the new rates.

8.       Detroit Edison will discontinue its pension equalization mechanism approved in Case No. U-13808 effective the date of the rate increase outlined in the order.

9.       Detroit Edison is relieved of the obligation set forth in Case No. U-13808 to propose an alternative post-employment benefits equalization mechanism in its next rate case.

10.   Detroit Edison is authorized to extend and modify provisions in its Economic Development Rider No. 9; its Experimental Load Aggregation Provision; and its Power Supply Pricing Option of Standard Contract Rider No. 3.

11.   Detroit Edison shall institute a true-up mechanism for storm and non-storm restoration expenses that will operate in a similar manner to the pension equalization mechanism and be subject to prudence checks.

12.   Detroit Edison is allowed to implement a one-way tracker for line clearance that will be structured similar to Consumer Energy's forestry expense tracker established in Case No. U-14347.  The tracker will be implemented using Staff's projected 2009 O&M expense for line clearance of $51,412,000.

13.   Detroit Edison, starting July 1, 2009 and annually thereafter, shall file a report with the Commission, noticing this docket, outlining the Company's litigation efforts against the United States Department of Energy regarding spent nuclear fuel.

14.   Detroit Edison is required in its next general rate case to include a new direct assignment study to functionalize the Company's general and intangible plant investment.

15.   Detroit Edison shall include testimony in its next general rate case for one or more proposals for the institution of rate decoupling.

16.   Detroit Edison's choice incentive mechanism is modified and extended as set forth in the order and will be recalculated to reflect the amounts approved in this order.

17.   All arguments not specifically addressed in the order are considered rejected.