MPSC approves cuts to Consumers gas, UPPCo electric bills Nearly $50.9 million reduction stems from new federal corporate tax rate

FOR IMMEDIATE RELEASE     June 28, 2018
Contact:                                 Nick Assendelft 517-284-8300
Customer Assistance:            800-292-9555

MPSC approves cuts to Consumers gas, UPPCo electric bills

Nearly $50.9 million reduction stems from new federal corporate tax rate

 

LANSING, Mich. – The Michigan Public Service Commission (MPSC) today approved monthly bills reductions for Consumers Energy Co. gas customers and Upper Peninsula Power Co. electric customers to reflect the impact of the new lower federal corporate income tax.

The changes to base rates will be effective July 1. Called Credit A, the calculations reflect the largest cost savings customers will see from initial adjustments after the Tax Cut and Jobs Act (TCJA) was signed into law in December 2017. The TCJA reduced the corporate tax rate from 35 percent to 21 percent and made other tax law changes.

“We’re happy to see that the Commission goals set in February are continuing to come to fruition on time or ahead of schedule,” said Commissioner Rachael Eubanks. “Thanks to the hard work by our staff, utilities, and stakeholders, savings will be delivered in a timely and accurate fashion. This is great news for customers, who will see additional savings from Credit B and Calculation C and other proceedings at the Commission as outlined in today’s order. We are leaving no stone unturned in identifying customer benefits of the TCJA.”

The Commission today approved a total of nearly $50.9 million in bill reductions for customers of Consumers and UPPCo. Customers will see a line for the credit on their bills until the utility’s next rate case is decided and the impact of the tax reduction is incorporated into rates.

Impact of today’s MPSC rulings on customer bills

 Utility 

 Total annualized amount 

 Monthly decrease 
 (beginning July 1) 

 Case No. 

 Consumers Energy Co. gas 

$47,529,000

$2.21**

U-20103

 Upper Peninsula Power Co. 

$3,324,000

$3.40*

U-20111

* Rate for residential customer who uses an average of 500 kilowatts a month.
** Rate for residential customer who uses an average of 10,000 cubic feet a month.

The MPSC in May approved nearly $50.3 million in cuts to bills for customers of Alpena Power Co., DTE Gas Co., Michigan Gas Utilities Corp., Northern States Power, SEMCO Energy Gas Co., and Upper Michigan Energy Resources Corp. (UMERC).

The MPSC has OK’d a total of approximately $101.2 million in cuts to bills for gas and electric customers of the eight utilities, for an average monthly savings of $1.83.

Because of the timing of rate cases decided earlier this year, Credit A refunds are still in process for electric customers of Consumers Energy, DTE Electric, and Indiana Michigan Power Co. Bill reductions are expected within the next few months.

The MPSC in February established a three-step process for utilities operating in Michigan to calculate tax savings and pass them on to customers in a timely manner (Case No. U-18494). Credit A captures future cost savings based on the new tax law. Credit B will look backward at savings due ratepayers from Jan. 1 to the commencement of Credit A. The third accounting adjustment, called Calculation C, figures the impact on utility bills of other items, such as excess deferred taxes or bonus depreciation, that are not accounted for under Credits A or B. Savings from Credit B and Calculation C will be decided later this year.

In a related case (Case No. U-18494) today, the Commission ordered utilities to calculate how the TCJA affects non‑base rate items such as renewable energy plans, gas transportation contracts, energy waste reduction programs, power supply cost recovery, electric transmission, and gas main replacement and include the adjustments in filings in future cases.

For an Issue Brief about the tax law update and its impact on utilities, click here.

Forward locational requirement methodology adopted

The Commission finalized the methodology to be used by energy providers to determine their forward locational requirement under Section 6w of Public Act 341 of 2016 (Case No. U-18444).

Section 6w requires all electric providers in Michigan to demonstrate to the Commission that they have made sufficient arrangements to produce or buy electric capacity resources within the state to meet reliability requirements four years into the future.

The Commission adopted a method by which incremental capacity need is determined in the section of the Lower Peninsula that is part of the Midcontinent Independent System Operator (MISO), the regional grid operator that manages power supply across 15 central states and the Canadian province of Manitoba. A percentage of that need is then allocated to each electric provider within that area. The incremental need methodology best positions Michigan to ensure future local reliability while preserving the existing electric choice market. The forward locational requirement will be reevaluated every two years.

Rate-regulated utilities must file their forward locational requirement demonstrations to the MPSC by Dec. 1 of each year, while alternative electric suppliers, cooperative electric utilities, and municipally-owned electric utilities must file in early February each year.

The MPSC also denied a request by Energy Michigan for a rehearing in the case. Energy Michigan challenged the Commission’s decision to make final determinations about forward locational requirements in a contested case as opposed to through a rule-making process.

For an Issue Brief about the forward locational requirement, click here.

 

Other rulings today

Electric service rules with cybersecurity provisions submitted for approval: Following a public comment period, the Commission approved updated electrical technical standards for reporting cybersecurity breaches and protecting utility infrastructure (Case Nos. U-18043 and U-18203). The electric service rules will now be submitted to the Legislative Service Bureau and the Office of Regulatory Reinvention (ORR) for review and approval.

Lifeline waiver extended: Michigan was granted a six-month extension by the Federal Communications Commission (FCC) to align the state’s Lifeline eligibility criteria with those of the FCC (Case No. U-18213). The extension to Dec. 31 means all Michigan designated eligible telecommunications carriers will continue to include membership in the Veterans and Survivors Pension Benefit Program as one of the criteria for eligibility for Lifeline phone service discounts.

UPPCo told to file estimated billing report: The Upper Peninsula Power Co. (UPPCo) was ordered to file a detailed report about its estimated billing practices at least 60 days before it seeks another meter reading waiver extension from the MPSC (Case No. U-18455). Residential billing rules require a utility to read meters every month and UPPCo has requested and been granted waivers of the rules, in place since 2007, to read meters every other month. UPPCo’s use of estimated billing has prompted customer complaints about inaccurate bills and an investigation by Commission staff.

DTE rate case disputes granted rehearing: Rehearings were approved for issues raised by DTE Electric. Co. and the Association of Businesses Advocating Tariff Equity (ABATE) about the Commission’s approval April 18 of a rate increase for DTE (Case No. U-18255). The Commission agreed to add $9.173 million for maintenance of the utility’s River Rouge Unit 3 plant, bringing the total approved rate increase to approximately $74.4 million. The Commission also approved rehearing on DTE’s interruptible supply rate but denied reconsideration of a transition to time-of-use rates.

Consumers Energy granted rehearing: The Commission allowed an additional $6,540,000 in retiree benefit plan expenses in Consumers Energy’s March 29 rate case approval, (Case No. U-18322), to bring the final rate increase to $72,269,000. The Commission clarified that its call for a three-month residential demand response trial period is consistent with state statutes. It denied a rehearing on residential rate design changes. The Commission also rejected two requests for rehearings by the Residential Customer Group (RCG).

Rehearing denied in I&M rate case: All requests for rehearing of issues in Indiana Michigan Power Co.’s (I&M) April 12 rate case (Case No. U-18370) were denied by the Commission. I&M asked for reconsideration saying the Commission erred in its findings on disallowing recovery of prudently incurred costs, the belief that standard service customers will subsidize open access distribution customers, proposed capacity rate, a tracker to account for lost revenue to avoid unlawful disallowance, and the capacity rate is not based on cost of service.

On-bill financing rules submitted for review: Commissioners approved for submission the final version of changes made to rules that will allow utility customers to have costs for energy waste reduction projects added to their monthly utility bills (Case No. U-20152). Should the Legislative Service Bureau (LSB) and the Office of Regulatory Reinvention (ORR) approve the changes to the Consumer Standards and Billing Practices for Electric and Natural Gas Service, the rules would be submitted to the Joint Committee on Administrative Rules (JCAR) before they go into effect.

Public input sought on telecommunications rules: The public can comment on rules governing services provided by an incumbent local exchange carrier to other providers for basic local exchange service (Case No. U-20160) and providing basic local exchange services (Case No. U-20161). Public hearings have been scheduled for Aug. 27 at 9 a.m. for U-20160 and 10 a.m. for U- 20161 at 7109 W. Saginaw Highway, Lansing. Comments in both cases also can be submitted by 5 p.m. Sept. 14 to Executive Secretary, Michigan Public Service Commission, P.O. Box 30221, Lansing, MI 48909, or mpscedockets@michigan.gov.

Consumers can install new Washtenaw gas main: Consumers Energy Co. was granted a Certificate of Public Convenience and Necessity to build an approximately 3,700-foot gas main along North Dancer Road in Lima Township, Washtenaw County (Case No. U-20143). DTE Gas did not object to the Consumers request to serve approximately 10 customers.

To look up cases from today’s meeting, access the eDockets filing system here.

For information about the MPSC, visit www.michigan.gov/mpsc, sign up for one of its listservs, or follow the Commission on Twitter.

DISCLAIMER: This document was prepared to aid the public’s understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission’s orders. The Commission’s orders are the official action of the Commission.

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