AG Nessel Secures THAW Donation, Saves Ratepayers Money Through 2 MPSC Settlements

Contact: Kelly Rossman-McKinney 517-335-7666
Agency: Attorney General

January 23, 2020

LANSING – Michigan Attorney General Dana Nessel’s involvement in two cases appearing today before the Michigan Public Service Commission helped save ratepayers money and secured a financial donation to a nonprofit group that helps people pay for utilities.

Following Nessel’s intervention in one of the cases, the MPSC approved a $545,000 settlement against Consumers Energy after the utility company was determined by MPSC staff to have violated MISS DIG regulations. Part of the settlement money will go to The Heat and Warmth Fund (THAW), a nonprofit organization that provides vulnerable Michigan residents with utility assistance.

In a separate case involving Indiana Michigan Power Co., Nessel helped negotiate a significantly lower rate increase than what the utility originally requested, ultimately saving customers from paying $22.1 million more for service.

MISS DIG and Consumers Energy

MISS DIG is Michigan’s utility safety notification system that helps mark public utility lines to assist businesses and individuals with their digging projects. 

The MPSC approved the $545,000 settlement after the parties agreed to the terms. This action follows the MPSC’s June 7, 2019 show cause order, which required the utility company to show why it should not be found in violation of the MISS DIG Underground Facility Damage Prevention and Safety Act, Public Act 174 of 2013. MPSC staffers had determined Consumers Energy failed to satisfy its statutory obligation to timely mark its facilities after receiving dig notices.

Because the MISS DIG program protects the integrity and safety of the natural gas pipeline system, Attorney General Nessel’s office intervened to learn the extent of the problem. After reviewing the case and discussing the problem with the MPSC staff and Consumers Energy, the Attorney General’s office agreed to settle the case. 

As part of the settlement, Consumers Energy agreed to civil penalties of $145,000, a $100,000 direct payment to the MISS DIG program, and a $300,000 donation to THAW. In addition, Consumers Energy agreed that the $1.7 million it incurred to eliminate the staking backlog and related facility damage would not be charged to customers. It must also implement new staking procedures and reporting requirements in an effort to avoid repeating this problem in the future.

“This is a great settlement for Consumers Energy customers,” Nessel said. “The settlement not only strengthens the MISS DIG program going forward, it provides $300,000 to THAW to help hundreds of natural gas customers afford heat for their homes during this winter season.”

The Detroit-based nonprofit was established in 1985 and has distributed over $190 million in assistance to more than 256,000 Michigan households, according to its website.

“THAW is very grateful that the terms of this settlement include a $300,000 donation that will be used to keep many struggling Michigan families healthy, safe and warm,” said Saunteel Jenkins, CEO of THAW. “These efforts will include families serviced by Consumers Energy that are in need of assistance.  Attorney General Nessel’s continued focus on outcomes that improve the quality of life for vulnerable families in this state should be commended.”

A copy of the MPSC’s order approving the settlement can be found here.

Indiana Michigan Power Co. Rate Case

Indiana Michigan Power Co., or I&M, on June 24, 2019 submitted a request to the MPSC seeking a rate increase of $58.5 million. I&M also sought a 10.5 percent return on equity.

Nessel worked with other parties in the case to negotiate a $22.1 million reduction to I&M’s request, thereby reducing the increase for an average residential customer from approximately 25 percent to 15 percent.

In addition, the agreement includes a three-year moratorium, meaning I&M cannot obtain another electric rate increase until 2023. I&M also agreed to a return on common equity of 9.86 percent, which should help reduce the cost of capital projects for customers, and the monthly customer charge for residential ratepayers will be unchanged.

The MPSC today approved a settlement agreement for I&M’s request, though the utility company’s approved rate increase was significantly lower than what it asked for.

“Cutting the requested rate increase by $22.1 million and preventing future rate increases for three years should help all customers,” said Nessel. “I’m especially happy to be able to give residential customers a three-year break on any future rate increases to help them manage their monthly budgets.”

I&M serves about 129,000 retail electric customers in southwestern Michigan consisting of Allegan, Berrien, Cass, Kalamazoo, St. Joseph, and Van Buren counties.

A copy of the MPSC’s order approving the settlement can be found here.

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