August 31, 2006

The Michigan Public Service Commission (MPSC) today issued an order approving a settlement agreement with The Detroit Edison Company that reduces electric rates for residential and business customers by a total of $78.75 million.

“The Public Service Commission’s careful review of Detroit Edison’s rates ensures that its customers are not paying more than is absolutely necessary for the delivery of reliable energy,” said MPSC Chairman J. Peter Lark. “The settlement agreement approved today will substantially reduce electric rates beginning in September. In these times when prices are increasing for virtually every other service, the Commission is particularly pleased to be able to reduce rates for all of Detroit Edison’s customers.”

Commissioner Laura Chappelle notes: “Today’s order provides welcome relief to all customer classes, including manufacturing, commercial, residential and choice customers. This reduction helps keep Michigan’s electric rates competitive with neighboring states.”

“In the last year we have seen significant rate increases across the nation, and expect continued increases in the region, so the rate relief Edison’s customers will see beginning in September is particularly welcome,” Chairman Lark added.

Beginning in September, rates will be reduced by $52.5 million on an annualized basis. Rates will also be reduced by an additional $26.25 million beginning on Jan. 1, 2007, bringing the total rate reduction to $78.75 million.

In addition, a surcharge instituted in Edison’s last rate case will be suspended pending the outcome of a court proceeding.

On March 23, 2006, the MPSC issued an order directing the Detroit Edison Company to show cause why its retail electric rates should not be reduced, citing the utility’s labor cost savings and a decline in electric choice customer sales. The Commission acted to ensure that customers of Detroit Edison were not paying excessive rates. The Commission further ordered that the case be expedited so that customers could see rate relief, if appropriate, as soon as possible.

Today’s order cuts electric rates for residential customers, on an annualized basis, by $10 million for the rest of 2006, and $15 million in 2007.

The average residential electric customer using 500 kilowatt-hours of energy per month will receive a reduction of approximately $6 in 2007.

Today’s order also reduces electric rates for commercial and industrial customers. Starting in September, commercial and industrial customers’ rates will be cut, on an annualized basis, $42.5 million for 2006 and $63.7 million for 2007. Large manufacturing customers on Rate R10 will see their rates cut, on an annualized basis, by $3.1 million in 2006 and $5 million in 2007. “These significant cuts will keep the state’s economic climate favorable for both current Michigan businesses, and those seeking to locate here,” Lark added.

Today’s order also approves, as part of this rate reduction, an experimental Choice Incentive Mechanism (CIM) and an experimental load aggregation program for large commercial and industrial customers.

The CIM is designed to provide financial protection for both Detroit Edison and its customers in the event that future choice sales volumes are different from those assumed in developing this rate reduction. The CIM mechanism will ensure electric rates remain reasonable even if choice sales change dramatically.

The experimental load aggregation program will permit full service commercial and industrial customers to aggregate their load from separate locations for billing purposes. This pilot program is designed to help determine if aggregation will benefit customers in the long-run. Customers exercising electric choice retain the right to aggregate load pursuant to Act 141, Michigan’s restructuring law.

“Our action today results in real savings for Michigan families and businesses,” said Commissioner Monica Martinez. “The MPSC has an obligation to ensure Michigan customers are charged reasonable rates and to continually find ways to address customer needs by approving experimental programs, such as the business load aggregation provision, and we did both through this order.”

Parties participating in the settlement were: the Detroit Edison Company, the Association of Businesses Advocating Tariff Equity (ABATE); Energy Michigan, Inc., Michigan Retailers Association, Constellation NewEnergy, Inc., Attorney General of Michigan, Detroit Edison Alliance of Retirees, Utility Workers Local 223, The Kroger Company, and the Commission staff. The National Energy Marketers Association participated in this case but did not enter into the full settlement agreement. It did, however, issue a statement of non-objection.

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

Case No. U-14838

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