MPSC approves $370.8 million in cuts for Michigan utility customers

FOR IMMEDIATE RELEASE   July 24, 2018
Contact:         Nick Assendelft 517-284-8300
Customer Assistance: 800-292-9555
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MPSC approves $370.8 million in cuts for Michigan utility customers

Consumers, DTE Electric latest to have tax law impacts OK’d

LANSING, Mich. – The Michigan Public Service Commission (MPSC) today approved nearly $269.6 million in savings for electric customers of Consumers Energy Co. and DTE Electric Co. from the new, lower federal corporate tax rate.

All totaled, the Commission has authorized approximately $370.8 million in rate reductions for Michigan customers of nine of the 10 rate-regulated utilities impacted by the Tax Cuts and Jobs Act (TCJA). Residential bills will drop an average of about $1.95 a month.

 “The Commission’s action ensures that Michigan residents will expediently receive utility bill reductions as a result of the federal Tax Cuts and Jobs Act that went into effect Jan. 1,” Commissioner Rachael Eubanks said. “The quick action was made possible by Commission Staff working tirelessly to identify everything customers are entitled to receive from the tax law changes. We also appreciate the cooperation by utilities and stakeholders in the first step of our process and look for that to continue as we move forward with our plan that will deliver even more savings to residents and businesses in Michigan.”

Today’s approved Consumers and DTE rate adjustments will be reflected in customer bills starting in August.

Impact of today’s MPSC rulings on customer bills

Utility

Total annualized amount

Monthly decrease* (beginning Aug. 1)

Case No.

Consumers Energy Co. electric

$112,690,000

$2.35

U-20102

DTE Electric Co.

$156,900,000

$2.46

U-20105

* Rate for residential customer who uses an average of 500 kilowatt hours a month.

Approximately $101.2 million in Credit A refunds had been ordered previously by the MPSC:

  • In June, nearly $50.9 million in rate cuts for Consumers Energy gas customers and Upper Peninsula Power Co. (UPPCo.) electric customers.

  • In May, nearly $50.3 million in rate reductions to 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 Credit A rate adjustment is pending for one utility: Indiana Michigan Power Co.

After the TCJA went into effect in January, the Commission quickly developed a three-step process for utilities to calculate their reduced corporate tax liability and pass the savings on to customers in a timely manner (Case No. U-18494).

The Credit A calculations capture future savings and will return to ratepayers most of the money due under the tax law adjustments, which include dropping the corporate rate from 35 percent to 21 percent.

Credit B will look backward at savings due ratepayers from Jan. 1 to the start of Credit A refunds. The third accounting adjustment, called Calculation C, will tally 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 are to be decided in cases fled later this year.

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

Other rulings today

LIEAF surcharge set at 93 cents per meter: The MPSC approved a monthly 93-cent surcharge per retail meter to support the Low-Income Energy Assistance Fund (LIEAF) (Case No. U-17377). The amount will be collected from September 2018 to August 2019. Utilities that are not participating in the surcharge collection can’t shut off service to any residential customer from Nov. 1, 2018, to April 15, 2019, for nonpayment of a delinquent account. LIEAF provides up to $50 million in energy assistance and self-sufficiency services to low-income households in conjunction with the Michigan Department of Health and Human Services (MDHHS).

Petition to rehear DTE Electric Co. natural gas plant filing denied: A petition to rehear DTE Energy Co.’s application for certificates of need for an 1,100 megawatt (MW) natural gas plant was denied (Case No. U-18419). The Michigan Environmental Council, Natural Resources Defense Council, and Sierra Club claimed the Commission made four legal errors: improperly shifting the burden of proof to case intervenors, improperly limiting the timeframe for the Commission’s analysis of the application, incorrect findings that DTE’s analysis of other resource options was reasonable, and improperly relying on materials outside the record. The Environmental Law & Policy Center, Ecology Center, Solar Energy Industries Association, Union of Concerned Scientists, and Vote Solar filed supporting responses to the petition.

UPPCo agrees to state reliability mechanism charge: Under a settlement agreement, the Upper Peninsula Power Co. (UPPCo.) agreed to a state reliability mechanism (SRM) charge of $90,810 per megawatt-year (Case No. U-20131). The charge will be assessed on full-service customers who have their electric provided by an alternative electric supplier (AES) in UPPCo’s service territory if the AES fails to satisfactorily demonstrate it can meet its future electric capacity obligations.

Michigan Gas Utilities gas cost recovery factor set: The Commission approved a settlement agreement with Michigan Gas Utilities Corp. (MCUG) that sets its gas cost recovery factor at $3.7181 per thousand cubic feet for the 12-month period ending March 31, 2019 (Case No. U-18414). Under Act 304, gas utilities can set an amount to collect from customers to reflect the anticipated cost of gas. A utility does not earn a profit on the gas it sells. 

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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