Michigan utility customers see more than $4B in rate relief as MPSC approves final refunds from federal corporate tax cuts

FOR IMMEDIATE RELEASE   Nov. 14, 2019

Media Contact: Matt Helms 517-284-8300
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LANSING, Mich. —  Wrapping up nearly two years of work to ensure that Michigan’s utility customers received the benefits of 2017 corporate tax cuts, the Michigan Public Service Commission today approved $75 million in rate refunds for customers of Indiana Michigan Power Co. (I&M).   

With the I&M rate refund, savings from the 2017 Tax Cuts and Jobs Act (TCJA) that were passed on dollar for dollar to Michigan ratepayers exceed $4 billion.  

Through three rounds of calculations, the MPSC Staff worked diligently with the state’s regulated utility companies to accurately tally the impact of the TCJA, which cut the corporate tax to 21 percent from 35 percent. The corporate savings are being returned to ratepayers, some through monthly bill credits, and others through longer-term adjustments to rates because the tax cuts affect long-term corporate investments over terms as long as 40 years.  

“Even before the tax cuts were passed, the MPSC staff was working on plans to make sure Michigan ratepayers would benefit,” said MPSC Chairman Sally Talberg. “Our staff went to extraordinary measures, and I want to thank them, and all the stakeholders involved, for a process that ensured fairness, transparency and, most importantly, rate relief for customers.”  

Today, the MPSC approved $75 million in excess accumulated deferred income tax to I&M’s Michigan electric customers (Case No U-20317). These calculations encompass long-term accounting effects of the TCJA.  

A typical residential customer using 500 kilowatt hours a month will see a decrease of $0.11 (0.15%) on their monthly bill.

In previous orders, the MPSC approved $382 million in initial rate decreases for Michigan utility customers in summer 2018 through the first round of calculations, called Credit A, which adjusted rates on a going-forward basis to account for the changes in the tax law. The second round of calculations, Credit B, resulted in $234 million in refunds that factored in the gap between when the TCJA took effect in January 2018 and when rates were adjusted in Credit A.

Through the final round, or Calculation C, the MPSC approved approximately $4.1 billion to be refunded to customers through settlement agreements and rate cases.   

For a summary of the total tax savings created by the TCJA, please see the MPSC’s TCJA Fact Sheet.  

138kV ELECTRIC FACILITY IN MORENCI IS PROPERLY CLASSIFIED AS DISTRIBUTION, MPSC RULES   

The MPSC denied a request by Michigan Electric Transmission Company LLC (METC), Wolverine Power Supply Cooperative Inc. (Wolverine) and Midwest Energy & Communications (ME&C) to classify a project to build a 138kV facility as an electricity transmission facility rather than distribution facility (Case No. U-20497). The Midcontinent Independent System Operator Inc. (MISO) Board of Directors had approved the Morenci Project as a transmission facility in December, but Consumers Energy Co. objected and ultimately filed a complaint with the Federal Energy Regulatory Commission (FERC). The Commission’s order today concludes that, pursuant to the seven-factor test established by FERC in Order No. 888, the Morenci Project is classified as distribution.  

MPSC FINES CABLE OPERATOR $1,500 FOR VIOLATIONS OF UNIFORM VIDEO SERVICES FRANCHISE ACT  

The MPSC fined Martell Cable Service $500 for each of three violations of the Uniform Video Service’s Franchise Act, for a total of $1,500, calling operator Anthony Martell’s lack of cooperation and compliance “epic,” despite significant effort to assist him in rectifying violations of his obligation to meet “simple, legal requirements related to the operation of his cable service business” that provides cable to 67 customers in Vermontville and Nashville, Mich. (Case No. 20504). The violations are for failing to submit required annual filings related to the provision of service to low-income residents and residents of all races, as well as an annual survey and proof that Martell Cable was a legally operating corporation, despite repeated attempts to get Mr. Martell into compliance.   

TWO CONSUMERS ENERGY POWER PURCHASE AGREEMENTS APPROVED   

The MPSC approved two power purchase agreements between Consumers Energy and two renewable energy suppliers (Case No. U-20604) under the federal Public Utility Regulatory Policies Act. Consumers Energy had contracted since 2001 with Crystal Flash Renewable LLC (Bay Windpower) for output of its Mackinaw City Plant and since 1984 with Grenfell Inc. for the output of its Belding Hydro Plant. Both initial contracts expired but continued while the parties negotiated new power purchase agreements. The MPSC approved Consumers’ contracts with lower rates through May 31, 2021, with Bay Windpower and through May 31, 2039, with Grenfell.   

MPSC APPROVES AMENDMENT TO DETROIT THERMAL SALES AGREEMENT   

The MPSC approved an amendment to Detroit Thermal LLC’s steam sales agreement with the County of Wayne and the Detroit-Wayne Joint Building Authority that includes an extension of the initial term for an additional three years and an updated fixed rate (Case No. U-18427).  

 

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

To watch a livestream 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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