Second round of tax cut savings OK'd for customers of 5 utilities

FOR IMMEDIATE RELEASE   Sept. 28, 2018                            Twitter: www.michigan.gov/mpsc
Contact:         Nick Assendelft 517-284-8300
Customer Assistance: 800-292-9555

Second round of tax cut savings OK’d for customers of 5 utilities
MPSC also closes review of proposals to remove old Detroit overhead wires

LANSING, Mich. – The Michigan Public Service Commission (MPSC) today approved five settlement agreements that return more savings to utility ratepayers from changes this year in the federal tax law.

A total of $7,625,590.44 will be refunded to electric customers of Alpena Power Co. and Upper Michigan Energy Resources Corp. (UMERC), and gas customers of Michigan Gas Utility Corp. (MGU), Northern States Power (NSP), SEMCO Energy Gas Co., and UMERC.

The rate recalculations, called Credit B, are the second of three utility bill adjustments that were ordered by the Commission following passage of the federal Tax Cuts and Jobs Act (TCJA). The TCJA lowered the corporate tax rate to 21 percent from 35 percent.

Credit B calculations capture the TCJA’s impact on bills from Jan. 1, when the law went into effect, to the date when previous, approved Credit A reductions started appearing on customer bills. Credit A adjustments went into effect in either July, August, or September, depending on when cases were approved for individual utility companies.

Impact of today’s MPSC rulings on customer bills

Utility

Annualized amount

Monthly decrease

Number

of payments

Case No.

Alpena Power Co.

$216,233.44

$1.50*

5 (Oct. 2018 – Feb. 2019)

U-20268

Michigan Gas Utility Corp.

$1,662,921

$2.59**

3 (Oct.-Dec.)

U-20181

Northern States Power Co.

$52,083

$0.69**

3 (Oct.-Dec.)

U-20186

SEMCO Energy Gas Co.

$4,734,647

$3.88**

3 (Oct.-Dec.)

U-20182

Upper Michigan Energy Resources Corp. (WPSC nat. gas zone)

$34,605

$0.73**

3 (Oct.-Dec.)

U-20183

Upper Michigan Energy Resources Corp. (WPSC electric zone)

$293,059

$4.65*

3 (Oct.-Dec.)

U-20183

Upper Michigan Energy Resources Corp. (WEPCO elec. zone)

$632,042

$3.81*

3 (Oct.-Dec.)

U-20183

* Residential average use of 500 kilowatt hours.

** Residential average use of 10,000 cubic feet.

After the TCJA was signed into law, the MPSC ordered 13 rate-regulated utilities to figure out how the lower corporate tax rate would affect customer bills (Case No. U-18494). There was no rate impact on three of the utilities under the order: Detroit Thermal, LLC; Presque Isle Electric and Gas Co-Op; and Wisconsin Electric Power Co.

The Commission has set up the three-step process -- Credit A, Credit B and Calculation C – to capture short- and long-term impacts from the TCJA on ratepayer bills. Credit A cases were completed in August, with a total of $379.5 million in rate reductions for customers of 10 utilities.

The first Credit B settlement agreement was approved in August. Northern States Power Co. (NSP) adjusted its electric rates by $135,383 (Case No. U-20185). The average residential customer in the western Upper Peninsula will see monthly bills decline by $1.85.

Still to be computed are Credit B impacts for Consumers Energy Co. gas and electric, DTE Electric Co., DTE Gas Co., Indiana Michigan Power Co. (I&M), and Upper Peninsula Power Co. (UPPCO). Calculation C, which looks at long-term budgeted items not accounted for under Credits A or B, will be addressed after Credit B cases are completed.

Commission closes review of Detroit arc wire removal

The MPSC concluded its evaluation of proposals on how to remove old wires that may come into contact with DTE Electric Co.’s grid in the city of Detroit. The Commission requested DTE Electric to come up with an approach to address out-of-service overhead wires not owned by the utility, after an unenergized wire fell onto a live wire in a Detroit neighborhood. A child was fatally injured after coming into contact with the broken wire.

In its final report filed on Aug. 31, DTE said it will address arc wire as part of its system hardening and conversion programs, improve how it responds to downed wire reports, expand a public information campaign, clear priority substations and circuits, and remove old wire as routine or trouble work is performed.

The Commission said DTE Electric must continue to address downed wire matters in a systematic manner. Funding and performance expectations for the work will be addressed in DTE Electric’s pending rate case (Case No. U-20162).

Power purchase agreements allowed to continue

The Commission agreed to allow electric generating facilities owned by Viking Energy of McBain, LLC, Viking Energy of Lincoln, LLC, and Michiana Hydroelectric Company to continue their power purchase agreements (PPA) with Consumers Energy Co. (Case No. U-17981). The Independent Power Producers Coalition of Michigan (IPPC) argued the PPAs had expired or were about to expire and since the MPSC has not set avoided cost under the federal Public Utility Regulatory Policies Act of 1978 (PURPA), the contracts should continue.

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

Visit www.michigan.gov/mpsc, sign up for 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.