MPSC approves Consumers Energy electric rate increase, EV pilot

FOR IMMEDIATE RELEASE   January 9, 2019

Contact: Nick Assendelft 517-284-8300
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LANSING, Mich. – The Michigan Public Service Commission (MPSC) today approved an electric rate increase settlement agreement for Consumers Energy Co. and authorized the utility to launch the state’s first electric vehicle infrastructure pilot program.

The parties to the settlement agreed to a $24 million rate decrease as well as the elimination of the Tax Cuts and Jobs Act Credit A rate reduction of $123 million, resulting in a net $99 million increase (Case No. U-20134). The MPSC ordered the Credit A tax recalculations last year to identify savings due to utility customers from the TCJA’s lower corporate tax. Credit A reductions are reflected on bills until the Commission decides on a utility’s subsequent rate request, which would have the lower corporate tax as part of its calculations.

Under the new rate approved today, a residential customer who uses 500 kilowatt hours of electricity a month will see their monthly bill increase by $1.62. The rates go into effect Jan. 10.

As part of the settlement agreement, Consumers will spend this year at least $200 million annually on its electric distribution reliability capital program and $53 million annually on clearing vegetation and trimming trees around distribution lines. The utility will provide Commission staff with regular updates on its spending and an annual report on investments in both areas.

Consumers will also launch its PowerMIDrive pilot program, a three-year, $10 million effort to support the growing electric vehicle (EV) market in Michigan through new rates, rebates and customer education. The program includes a Nighttime Savers Rate to encourage EV drivers to charge their vehicles between 7 p.m. and 6 a.m. Residential EV drivers who sign up for the nighttime rate will be offered a $500 rebate for each EV. Consumers will also offer $5,000 rebates for chargers installed in public areas such as workplaces and multi-unit dwellings, and up to $70,000 in rebates for the installation of a DC Fast Charger.

The Commission ruled separately on a contested issue in the PowerMIDrive pilot and it approved Consumers’ request to recover program costs over five years through a deferred accounting mechanism. The Commission ruled the mechanism is an incentive for Consumers to support EV charger placement throughout Michigan, avoid expensive future capital infrastructure investments when EV use is anticipated to grow, and educate consumers about the benefits of off-peak charging. The cost recovery request was agreed to by all parties in the settlement agreement except the Environmental Law & Policy Center (ELPC).

The Association of Businesses Advocating Tariff Equity (ABATE); Michigan Environmental Council (MEC); Natural Resource Defense Council (NRDC); Sierra Club; Kroger Co.; Hemlock Semiconductor Operations LLC; Michigan Cable Telecommunications Association (MCTA); Energy Michigan, Inc.; Michigan Energy Innovation Business Council (MEIBC); Michigan State Utility Workers Council; ChargePoint, Inc.; Ecology Center; ELPC; Commission staff; and the cities of Flint and Grand Rapids agreed to the rate case settlement. 

Filing statements of non-objection to the agreement were Midland Cogeneration Venture Limited Partnership (MCV); the Residential Customer Group (RCG); Wal-Mart Stores East, LP and Sam’s East, Inc.; and the Department of the Attorney General.

Consumers Energy Co. Case No. U-20134 Fact Sheet

  • Revenue increase granted: Approximately $99 million ($25 million decrease and elimination of the $123 million tax savings under the Tax Cuts and Jobs Act)
  • Return on common equity: 10 percent
  • The non-transmitting meter tariff up-front charges -- $69.39 for customers who do not  have a transmitting meter installed and $123.91 for those who have a transmitting meter -- will remain, but the monthly charge will be reduced from $9.72 to $3. 
  • The residential summer “inverted block” rate will be eliminated by January 2020 and will be replaced with on-peak and all-other hours rates.
  • The State Reliability Mechanism (SRM) charge is $335.99 per megawatt-day. The charge is assessed to customers of alternative electric suppliers if those suppliers can’t meet their customers’ anticipated power needs.
  • Any costs above $8 million in reparations paid by CSX Transportation will be refunded to customers through a future power supply cost recovery (PSCR) proceeding.
  • In its next electric general rate case, Consumers will provide a study analyzing the cost of standby service to customers who produce their own power through renewable sources and whose capacity exceeds 550 kilowatts.
  • Approximately $31.5 million will be spent on demand response (DR) programs, which adjusts service to customers to match capacity needs with current resources available.
  • Consumers will set up a discussion schedule with officials representing the cities of Grand Rapids and Flint over concerns about payments for converting city lighting to efficient light-emitting diodes (LED).
  • Consumers agreed not to file for a rate increase before Jan. 1, 2020.

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

To watch a livestream of the MPSC’s meetings, click here.

Visit www.michigan.gov/mpsc, sign up for one of its listservs, or follow the MPSC 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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