The Michigan Public Service Commission (MPSC) today authorized Consumers Energy Company to increase its electric rates by $139,411,000 annually, below the amount the company began to self-implement in May, as allowed by Michigan law.  As a result, the MPSC has directed the utility company to refund to its electric customers approximately $39.6 million on an annual basis, plus interest, subject to reconciliation.  As a result of that, customers will see a decrease of approximately 1.25 percent.  In addition, customers will see a refund of the remaining $73 million from the sale of the Palisades Nuclear Plant. (The company has already refunded some $36 million from the sale, as a result of the Commission's May 12 order in this case.)

"Mindful that many residential and business customers are struggling to make ends meet, the Commission took several actions in this rate case to safeguard them and to increase electric reliability," said MPSC Chairman Isiogu.  "And because the amount approved today is less than the amount that Consumers Energy self-implemented, customers are due a refund - plus interest.

"The Commission did not approve executive bonuses in rates, and it once again is requiring the utility to spend a certain amount on tree-trimming activities or refund the unspent amount to customers.  In addition, to protect customers, the MPSC directed the company to establish a trust fund for the disposal costs of spent nuclear fuel associated with pre-1983 nuclear power generation at its Palisades Nuclear Power Plant.

"And because Advanced Metering Infrastructure (AMI) is essential to Michigan's future, the Commission approved the utility's proposed expenses for AMI, which will benefit customers by making the electrical grid a more efficient power system."

Today's order directs Consumers Energy to file an application with the MPSC by Jan. 6, 2010 for authority to conduct the refund required by Michigan law.  Interest will continue to accrue until the refund occurs.

Consumers Energy Company on Nov. 14, 2008 filed an application requesting a $215 million rate increase.  The final amount approved today ($139.4 million) is 35 percent below what the utility requested and represents an increase of 4.25 percent over the rates set in Consumers Energy's last electric rate case (U-15245).  This will be partially offset by the $73 million Palisades refund.

A fact sheet with details follows.

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

Case No. U-15645

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Consumers Energy Company

(Electric Division)

Case No. U-15645

Commission Order Fact Sheet

1. Commission Order Date:                   November 2, 2009
2. Revenue Increase Granted:                $139,411,000
3. Rate of Return on Common
   Equity:                                             10.7%
4. Debt/Common Equity Percentage:      52.22% debt, 
                                                          47.22% equity
5. Overall Rate of Return:                       6.98%
6. Consumer Energy Company self implemented a $179,000,000 rate increase on May 14, 2009.  Since the Commission is granting a revenue increase that is less than the self-implemented amount of $179,000,000, the Commission is ordering a refund of $39,600,000 on an annual basis to Consumer Energy customers.
7. Consumer Energy Company was granted a tracker for uncollectibles expense.
8. Consumer Energy Company was granted a decoupling mechanism as part of a pilot program.
9. Consumer Energy Company was ordered to continue the tree trimming tracker.
10. Consumer Energy Company shall file final reconciliations for all remaining Palisades refund monies, approximately $73Million.
11. Commission removed the pre-1983 spent nuclear fuel disposal DOE Liability from the rate base.  Consumer Energy Company shall file a proposal to establish a trust fund in its next electric rate case for this liability.
12. Consumer Energy Company is ordered to file a report with the Commission on the cost of utility workers training.