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MPSC approves $100M Consumers Energy increase on electric rates to boost reliability and address aging infrastructure while maintaining affordability
December 17, 2020
FOR IMMEDIATE RELEASE December 17, 2020
The Michigan Public Service Commission today approved a $100 million increase in the electric rates for customers of Consumers Energy, a reduction by more than half of what the utility had requested (Case No. U-20697).
Consumers had sought an increase in its electric rates of approximately $254 million, which would have a total impact to customers of $289 million because of the company’s proposed expiration of the Tax Cuts and Jobs Act (TCJA) Calculation C concurrent with the inclusion of those amounts in the requested rates. Consumers said it was asking for the rate increase to fund replacement and modernization of its electric distribution system infrastructure as well as the utility’s work to meet its clean energy goals by eliminating coal-fired electricity generation and reducing carbon emissions.
The company also asked to increase its authorized return on common equity to 10.5% from 10%, with a 52.5% equity ratio. Instead, the order today authorized a return on equity of 9.9%, with the company’s equity ratio set at 51.11%, consistent with previous Commission guidance.
The increase of $100 million over rates approved in a settlement agreement in Case No. U-20134 in 2019 represents approximately 39% of Consumers’ initial rate increase request for the 12 months ending Dec. 31, 2021. Consumers may implement the rate increase effective Jan. 1, 2021. The total amount approved, including the accelerated TCJA credits, equals $134 million.
A residential customer using 500 kilowatt hours of electricity per month would pay approximately $9.17 more per month, an 11.93% increase, factoring in the rate increase and other adjustments.
The order provides further guidance for the Company’s 5-year Distribution Plan filing in the summer of 2021 to refine forecasting methods using advanced metering data and consider performance-based metrics associated with investments. The order also outlines the Commission’s vision for examining costs and benefits of distributed energy resources (DERs), particularly looking at how customers with DERs use the grid now and into the future, starting with a comprehensive study to be conducted in 2021 in line with Senate Resolution 142 of 2020.
Among other issues, today’s order also:
- Increases authorized annual vegetation management spending to reduce power outages and improve reliability with new reporting protocols for the MPSC to monitor the impacts.
- Authorizes cost recovery for eligible investments such as demand response and conservation voltage reduction reviewed and authorized in Consumers’ Integrated Resource Plan (IRP); demand response reduces costs by shifting consumption away from peak usage times when it is expensive to produce more power and conservation voltage reduction cuts energy waste through smart grid controls.
- Acknowledges Consumers’ agreement to voluntarily raise its distributed generation cap from 1% to 2% to allow continued participation by customers installing distributed generation such as solar to be paid for excess power. The compensation to customers for this excess power, known as outflow, is based on the utility’s full power supply costs, less transmission, using the inflow-outflow methodology previously approved by the MPSC to implement the 2016 energy laws.
- Approves Consumers’ three-year PowerMIFleet pilot project to study the impact of increasing electrification of business vehicle fleets on the power grid.
- Allows for increased investment in the electric distribution system to improve reliability and address aging infrastructure, including a tracking mechanism to account for actual spending on hard-to-predict, reactive capital programs such as new business connections subject to additional reporting and stipulations.
- Directs MPSC Staff to work with Consumers and stakeholders on changes to street lighting tariffs to accurately account for the operational performance, costs, and benefits of conversions to energy efficient lighting technologies.
- Directs MPSC staff to work with stakeholders on an updated methodology for determining payments and credits for new customers connecting to the utility’s electrical system.
- Approves a new contract for a discounted rate, called a long-term industrial load retention rate, for polysilicon manufacturer Hemlock Semiconductor Operations LLC. pursuant to Public Act 348 of 2018.
- Directs Consumers to eliminate the TCJA Calculation C credit on Jan. 1, 2021.
Intervenors in the case were Michigan Cable Telecommunications Association; Michigan Environmental Council, Natural Resources Defense Council, Sierra Club, and the Citizens Utility Board of Michigan; City of Grand Rapids; Michigan Municipal Association of Utility Issues; Association of Businesses Advocating Tariff Equity; Kroger Co.; Walmart Inc.; ChargePoint; Environmental Law & Policy Center, Vote Solar, Solar Energies Industry Association, Great Lakes Renewable Energy Association, and Ecology Center; Michigan Energy Innovations Business Council/Institute for Energy Innovation; Midland Cogeneration Venture LP; Hemlock Semiconductor Operations LLC; Michigan State Utility Workers Council, Utility Workers Union of America, AFL-CIO; Residential Customer Group, and the Michigan Attorney General’s Office.
To look up cases from today’s meeting, access the MPSC’s E-Dockets filing system.
Watch recordings of MPSC meetings on its YouTube channel.
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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