MPSC approves settlement agreement reducing rate increase for DTE Gas Co. by 46%

FOR IMMEDIATE RELEASE   August 20, 2020

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The Michigan Public Service Commission today approved a $110 million rate increase for DTE Gas Co., the result of a settlement agreement that reduced by more than 46% the increase on the utility’s 1.2 million residential and commercial customers (Case No. U-20642).

DTE Gas in November 2019 sought a $203.8 million rate increase, a request the company later reduced to $188.5 million. The company said it was seeking the increase to pay for natural gas system integrity expenditures and to offset increasing customer conservation and decreasing customer consumption.

All parties in the case signed onto the settlement except for the Residential Customer Group, which filed a statement of non-objection. Also intervening in the case were the Association of Businesses Advocating Tariff Equity; Detroit Thermal, LLC; the Michigan Department of the Attorney General; Citizens Utility Board of Michigan; Michigan Power Limited Partnership; Retail Energy Supply Association, and Verso Corporation. MPSC Staff also participated in the proceedings.

New rates will take effect Oct. 1, 2020. A residential customer using 100 cubic feet of gas a month will see an increase of approximately $2.97, or 3.9%, on their monthly bill. When an infrastructure recovery mechanism goes into effect in January 2021, the same customer will see an increase of approximately 63 cents, or 0.8%, for a total increase of $3.60, or 4.7%.

Under the settlement, DTE Gas also agreed to:

  • Make a one-time donation of $1 million to The Heat and Warmth Fund, which helps struggling households pay utility bills. The cost of the donation will be borne by DTE Energy shareholders, and not recovered from ratepayers.
  • Launch a demand response pilot program in winter 2021-2022 in line with recommendations from the MPSC’s 2019 Statewide Energy Assessment to increase resilience when energy supplies or delivery are constrained. The company will hold a conference with interested parties to share and refine proposals and implementation.
  • Include a 10-year natural gas delivery plan in its next general rate case that will provide a framework for the next decade of investment in its natural gas infrastructure.  Long-term infrastructure plans for gas utilities were recommended in the Statewide Energy Assessment to better prioritize investments based on cost, safety risk, resilience, and other factors.

The agreement reflects an authorized rate of return on common equity of 9.9%, and a common equity ratio of 52%. The company agreed to file a plan for a more balanced capital structure in its next rate case.

DTE Gas agreed to incremental $20 million accumulated deferred income tax amortization of its 2017 Tax Cuts and Jobs Act non-plant regulatory liability. The company also agreed to revised amortization schedule that accelerates the full return of the non-plant regulatory liability to customers through 2026 instead of 2031. The settlement also reflects participation levels of 33,000 customers in low income assistance and 70,000 customers in residential income assistance, and uncollectible expense of $27 million.

 

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

To watch recordings of the MPSC’s meetings, click 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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