MPSC approves $370.8 million in cuts for Michigan utility customers

The Michigan Public Service Commission (MPSC) 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.”

The 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.