6. Do other jurisdictions have (or have had) a policy of self-implementation to reduce "regulatory lag"? How are they similar or different from Michigan's, in design and effect?


Comments:

1. There is an inherent time lag between when the utility makes new investments or increases its costs and when it recovers those costs in rates. Numerous states have instituted and explored various approaches to limit regulatory lag to create a more efficient regulatory process and encourage electric reliability investments.

2. Under PA 286 of 2008, final decisions in rate cases must be issued within one year from the date of a completed or amended application. While the MPSC has a full year to issue a decision, utilities may self-implement the proposed rates within 180 days after filing, subject to refunds based on MPSC's final decision. For good cause, the MPSC may issue a temporary order preventing or delaying self-implementation.

3. Since the passage of PA 286, 20 rates cases were completed. The length of time between the rate case filing and a commission decision has been an average of 9.2 months. This is compared to an average duration of 9.0 months nationwide. The average duration of  a rate case in Michigan that was fully litigated (not settled by the parties) was 11.4 months.

4. Since 2008, utilities self-implemented rates in 13 cases. Self-implementation has avoided the extensive litigation that existed under the "interim rate" structure that preceded PA 286. The self-implementation provision can help reduce regulatory lag but, in and of itself, does not eliminate it.

5. Of the 50 states and District of Columbia, there are 45 that have some form of interim process for rate increases.

- Joint response from Consumers Energy, DTE Energy, and MEGA

Energy Forum Comment

04/25/2013