Gas Utility Transportation Programs: Description and History

Utility Transportation Tariff History by MPSC case

prior to 1989

Other Utility Transportation Programs and Issues

• Utilities without Transportation Tariffs
• Special Contracts  under Act 3
• Gas Storage Rates
• Gas Bypass
• Gas Diversion
• Off-System Transmission Rate
• Special Discounted Rates
• Miscellaneous Notes

In addition to sales service, most of the twelve natural gas utilities in Michigan offer services to transport natural gas owned by others. These pages summarize those transportation services. For current transportation rates, see the current rate books.

• Gas Choice Program
• Standards of Conduct
• Gas Choice Status

U-13365: Xcel Energy (NSP-W)Gas Transportation Tariffs:

• September 16, 2002, the Commission in its Order Approving Settlement Agreement (reference MPSC Orders page, U-13365order) authorized NSP-W to incorporate into its Commission approved gas rate book the gas transportation tariff attached. Prior to issuance of this Commission order NSP-W did not offer transportation service but did provide sales service to two customers, Bessemer Plywood and Grand View Hospital, through special contracts that were not part of the tariffed sales service. The transportation service is available on an interruptible basis to all commercial and industrial customers who agree to: 1) curtail use of gas whenever requested by the Company, 2) shall have fuel requirements of 25,000 therms per year, or more, 3) execute a service agreement with the Company detailing terms, nomination requirements, etc. Such customers are subject to the following charges and terms and conditions of service:
  • Customer Charge per month $40.00
  • Daily Metering Charge per month $25.00
  • Administrative Charge per month $25.00
  • Distribution Charge per therm $0.0330
  • Unauthorized Use Penalties: If customer fails to curtail his use of gas when requested by the Company any volume of gas used in excess of the authorized volume shall be charged at the highest price reported during the curtailment period for NNG receipt point at Ventura or Demarcation as reported by Gas Daily, plus $1.00 per therm. Such gas shall be considered a sale of gas.
  • Daily Balancing - Daily Nominations: There is no additional charge for this service for imbalances up to plus or minus 5% of customers' nominated volume. Customers are assessed a Daily Variance charge of $0.0072 per therm for imbalances greater than 5% and up to 10%. Imbalances greater than 10% are assessed a Daily Variance charge of $0.1000 per therm.
  • Daily Imbalance Pool: Customers must choose a pool - NSP pool or a Customer/Third Party Pool.
  • Daily Balancing - Monthly Nomination Provision: Instead of Daily Balancing, customers may choose monthly nominations and pay $0.0030 per therm of use. Under this provision customers are not subject to Daily nomination fees.
  • Monthly Balancing Provision: At the end of the month each customer is subject to a cash out of its monthly imbalances. Imbalances within plus or minus 5% of the nominated amount are bought or sold at the Market Cost of Gas. Positive Imbalances greater than 5% of the nominated volumes are purchased at 0.8 times the market cost of gas, and Negative Imbalances are sold at 1.2 times the market cost of gas.
  • All customers are required to have telemetering.
  • The following backup service are, also, available:
    • Backup Capacity Service.
    • Backup Supply Service.
    • Backup Constraint Day Service - $0.50 per therm, plus incremental cost of gas supplies for the period involved.

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U-12741: Wisconsin Public Service Corporation Gas Transportation Tariffs:

• February 5, 2001, the Commission in its Order Approving Application (reference MPSC Orders page, U-12741order) authorized Wisconsin Public Service Corporation (WPS) to incorporate into its Commission approved gas rate book the gas transportation tariffs attached. Prior to this order WPS provided transportation service to eleven customers in Michigan's upper peninsula, in the vicinity of the City of Menominee, under the provisions of 1929 PA 9, MCL 478.101 (see MCL for Act 9 of 1929). The terms and conditions of service under the new Gas Transportation Service, Schedules GT through GT-18, incorporated the terms and conditions of service and rates which were provided under the individual Act 9 transportation contracts. Pursuant to the Commission's order the Gas Transportation Service tariffs become effective April 1, 2001. Highlights of the tariff are as follows:
  • RATES:

    	Cg-TM (Up to 10,000 therms per year)		$
    	Monthly Customer Charge		$ 147.50
    	Rate per therm		0.08514
    	Cg-TL (10,001 to 1,800,000 therms per year)		$
    	Monthly Customer Charge		212.00
    	Rate per therm		0.06214
    	Cg-TSL (over 1,800,000 therms per year)		$
    	Monthly Customer Charge		212.00
    	Rate per therm		0.03000
    	Peak Day Backup Service and Annual Supply Backup Service		$
    	Demand Charge
    		Per therm of Demand Per Month (Annual Option)	$0.58685
    		Per therm of Demand Per Month (Seasonal Option)	$0.66893
    	Commodity Charge
    		City Gate Rate Per Therm	$0.47351
    	Note: Peak Day Backup Service rates are established in the Company's annual GCR Plan case filed with the MPSC (see GCR Factor status).

  • Daily Balancing -Customers are required to balance their usage on a daily basis.
  • Monthly Balancing - Imbalances will be cashed-out at the end of the month.
  • Pooling - Customers may enter into to pools for purposes of balancing.
  • Daily Balancing Service is available from the Company.
  • Unauthorized Gas Usage Charges - A charge of at least $2.00 per therm will be assessed for all unauthorized gas use. If the Company incurs pipeline charges greater than $2.00 per therm, then the Company will charge $10.00 per therm plus any incremental costs incurred due to the unauthorized use of gas.

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U-11220: SEMCO Energy Gas Company Gas Transportation Service Program:

• October 29, 1997, the Commission in its Opinion and Order (reference MPSC Orders page, U-11220 order) approving the merger of the rates and tariffs of Southeastern Michigan Gas Company and Michigan Gas Company, jointly referred to as SEMCO Energy Gas Company (SEMCO). In that order the Commission established two gas transportation tariffs for end users: Transportation Service (TR-1, TR-2, and TR-3) and Aggregated Transportation Service (ATS).
• Transportation Service (TR-1, TR-2, and TR-3) tariff contained the following rates and provisions:
  • Daily Balancing Requirement:
  • Monthly Cash-out: Positive and negative monthly imbalances less than 5% of the gas delivered in the month will rollover to the next month. SEMCO will cash out positive and negative imbalances greater than 5% of gas delivered during the month at indexed prices. This provision replaces the Unauthorized Gas Usage Charge.
  • Gas-in-Kind: SEMCO shall retain .98% of all gas received to compensate it for the company-use and lost-and-unaccounted-for gas.
  • Aggregation of Accounts Option: Customers receiving gas at multiple facilities under common ownership may elect to aggregate the quantities of gas supplied to such facilities under the following conditions: a) customer designates one account as a master account on the transportation service tariff, b) General Service Rate accounts qualify as subsidiary accounts that may aggregate with the master account, c) master account is billed as a transportation account, the subsidiary accounts are treated as transportation accounts except they pay the General Service Rate customer charge and distribution charge.
  • Transportation Standards of Conduct were adopted.
  • No assignment of upstream pipeline capacity.
  • All customers are eligible to participate in the transportation program.

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U-10960: Michigan Gas Utilities Rate Case.

• October 31, 1995 MGU filed an application requesting authority to increase its rates and revise its transportation tariffs, among other things.
• March 27, 1997 the Commission issued its Opinion and Order (reference MPSC Orders page, U-10960 order, U-10960 order denying rehearing) in the rate case approving revisions to MGU's transportation tariffs. MGU's request for a daily balancing provision was denied, but the transportation tariff was restructured, and included the following features:
  • All customers are eligible to participate in the transportation program.
  • Rate classes TR-1, TR-2, and TR-3 were established. Breakeven point between TR-1 and TR-2 was set at 50,000 Mcf per year. Breakeven point between TR-2 and TR-3 is set at 225,000 Mcf.
  • Monthly Load Balancing: Customers may store up to 5% of their ACQ without additional charge - Authorized Tolerance Level (ATL).
  • Monthly Cash out of Positive and Negative imbalances. Positive and negative imbalances up to 5% of the monthly nomination were cashed-out at the average MichCon City Gate Index for Large End-Users for that month. Positive imbalances above 5% of monthly nominations were cashed-out at the Low price for the MichCon City Gate Index, and negative imbalances were cashed out at the High price for the MichCon City Gate Index for Large End-Users. This feature eliminated the need for an unauthorized gas usage charge.
  • Imbalance Paper Pooling Option: Any customer or customer's agent with multiple deliveries at any receipt point could pool those deliveries at that same receipt point.
  • Gas In Kind of 0.68% would be withheld to compensate the Company for lost and unaccounted for gas and company use gas.
  • No provision to allow customers to purchase system supply gas, other than the monthly cash out provision.

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U-10755: Consumers Energy Company (Consumers Power Company) rate case:

• December 29, 1994 Consumers requested rate relief and tariff revisions.
• March 11, 1996, the Commission issued its final order (reference MPSC Orders Archive page, U-10755 Order, U-10755 Order denying rehearing) which, among other things provided:
  • Transportation tariffs T-1 and T-2 were split to create Rates ST-1 and ST-2 for transportation customers using less than 100,000 Mcf per year, and Rates LT-1 and LT-2 for transportation customers using more than 100,000 Mcf per year.
  • ST and LT rates retained the same basic provision and rate structure as the predecessor tariffs including:

• Monthly Load Balancing (Storage): Customers are still entitled to store up to 8.5% of ACQ (Authorized Tolerance Level), but injections were restricted to 1.43% of ACQ during September and October and withdrawals were restricted to 3% of ACQ during November through March of each year. Gas in storage above the ATL ( 8.5% of ACQ) will be charged a storage rate of $0.25 per Mcf, or Consumers may require the customer to reduce its balance to ATL.
• System Supply Entitlement Charge option was retained, although seldom used.
• Use and Loss: Gas in Kind was set at 1.03% of gas delivered.
• Aggregation of Accounts provision was adopted. Option A allowed contiguous facilities, under a common ownership, and operated as a unitary enterprise to be treated as a single account for billing purposes. This meant that only one customer charge would be applied. Option B allowed multiple facilities under a common ownership to aggregate the gas supplied to the facilities for billing purposes if; one of the facilities, designated as the master account, would be served under a transportation tariff, and the remaining facilities, designated as subsidiary accounts, were taking service under a sales tariff. The subsidiary accounts would be billed as sales accounts, excluding the GCR Factor. Remote metering was not required for any of the accounts.
• Contract Storage Rate tariff was approved to allow customers to contract for additional storage service as they needed it. The rate was $300 per month plus a demand and commodity charge from $0.20 per Mcf up to $1.50 per Mcf as negotiated between the Consumers and the customer.

U-10150: Michigan Consolidated Gas Company Rate Case:

• September 1, 1992 MichCon requested rate relief and tariff revisions.
• October 28, 1993 the Commission issued its final order (reference MPSC Orders page, U-10150 Order, U-10150 order denying rehearing) in the rate case, which included the following:

  ST and LT rates retained the same basic provision and rate structure as the predecessor tariffs including:

  • Transportation tariffs T-1 and T-2 were split to create Rates ST-1 and ST-2 for transportation customers using less than 100,000 Mcf per year, and Rates LT-1 and LT-2 for transportation customers using more than 100,000 Mcf per year.

• Monthly Load Balancing (Storage): Customers are still entitled to store up to 10% of ACQ, but injections were restricted to 1.43% of ACQ during September and October and withdrawals were restricted to 3% of ACQ during November through March of each year. Gas in storage above 10% of ACQ will be charged a storage rate of $0.25 per Mcf, or MichCon may require the customer to reduce its balance to 10% of ACQ.
• System Supply Entitlement Charge option was eliminated.
• Use and Loss: Gas in Kind was reduced from 1.78% to 0.9% of gas delivered.
• Contract Storage Rate tariff was approved to allow customers to contract for additional storage service as they needed it. The rate was $300 per month plus a demand and commodity charge up to $1.50 per Mcf as negotiated between the MichCon and the customer. [FERC required that the ceiling on this rate be set at the cost of service since MichCon could offer this to interstate customers]

U-9323: Michigan Gas Company Gas Transportation Service Program:

• April 14, 1989 Michigan Gas Company (now part of SEMCO Energy Gas Company) filed an application for authority to increase its rates and to develop appropriate rates, charges, and conditions of service for the provision of gas transportation service.
• June 29, 1990 the Commission issued its final order U-9323 (reference MPSC Orders page, U-9323 Order). The Commission established two transportation rate classes: 1) Interruptible Transportation Service (ITS) Rate, and 2) Firm Transportation Service (FTS) Rate. To be eligible for Rate ITS customers had to have complete standby equipment, maintained in good operating condition, and have sufficient stock on hand to able to comply with a complete curtailment with only 2 hours advance notice. Rates ITS and FTS included the following provisions:
  • All customers are eligible to participate in the transportation program.
  • Transportation Charges:
  • Monthly Customer Charge $1,000
  • Use and Loss: Michigan Gas Company shall retain .89% of all gas received to compensate it for the company-use and lost-and-unaccounted-for gas.
  • System Supply Entitlement Charge: Optional backup service only available to Rate FTS customers at $1.50 per Mcf, Company could discount down to $0.10 per Mcf.
  • Monthly Load Balancing: No charge for positive or negative cumulative imbalances less than 5% of customer's cumulative monthly nominations. Positive or negative cumulative imbalances greater than 5% but less than 10% of customer's cumulative monthly nominations would be charged at a rate of $0.12 per Mcf. Positive imbalances greater than 10% of customer's cumulative nominations would be charged at a rate of $2.00 per Mcf in addition to all other applicable charges. Negative imbalances greater than 10% of customer's cumulative nominations would be charged at a rate of $10.00 per Mcf in addition to all other applicable charges
  • Customers that choose to take service under Rates ITS or FTS are prohibited from taking sales service for five years.
  • No assignment of upstream pipeline capacity.
  • Transportation customers are subject to take-or-pay charges as approved by the Commission for recovery.

U-8822: Southeastern Michigan Gas Company gas transportation program:

• June 30, 1987 the Commission initiated Case No U-8822 to investigate and develop appropriate rates, charges, and conditions of service for Southeastern (now part of SEMCO Energy Gas Company) relating to its provision of gas transportation service (reference MPSC Orders page, U-8822 Order). Southeastern filed testimony requesting authority to implement transportation tariffs and hearings were held. On April 11, 1988, a jointly sponsored stipulation signed by all the parties to the case, except Amoco, was admitted into evidence. (Amoco stated that it did not object to the stipulation). The stipulation provided for the dismissal of the case and deferred the matter of transportation tariffs until Southeastern's next rate case, which was U-11220, filed on December 10, 1996. The stipulation required Southeastern to continue providing transportation service to its end users under Act 9 of 1929 contracts, subject to system capacity restrictions. Southeastern continued to provide transportation service under Act 9 until October, 1997. The Act 9 contracts generally provided transportation service end users at a rate equal to the rates the customers would have paid if the service was provided under one of Southeastern's sales tariffs, excluding the Gas Cost Recovery Factor. Southeastern's objective was to be "revenue neutral" as to whether a customer would choose sales or transportation service.
• May 10, 1988 case dismissed (reference MPSC Orders page, U-8822 Order).

U-8788: Michigan Gas Utilities Company Gas Transportation Service Program:

• April 21, 1987 the Commission initiated Case No U-8788 to investigate and develop appropriate rates, charges, and conditions of service for the provision of gas transportation service on MGU (reference MPSC Orders page, U-8788 Order). Unlike the MichCon and Consumers transportation cases this case was not combined with a rate case, therefore transportation rates were designed to be "revenue neutral" - MGU would be economically indifferent whether a customer chose sales or transportation service.
• April 20, 1989 the Commission issued its final order U-8788 (reference MPSC Orders page, U-8788 Order). The Commission established two transportation rate classes: 1) Rate T-1 for firm transportation service and 2) Rate T-2 for interruptible transportation service. The T-1 transportation charge was set at the distribution charge, less $0.0582 per Mcf and plus all applicable surcharges, specified under the designated service rate for all gas redelivered. The T-2 rate was the distribution charge specified in the interruptible sales rate, less $0.0582 per Mcf and plus all applicable surcharges, for all gas redelivered. Other Rate T-1 provision were:
  • All customers are eligible to participate in the transportation program.
  • Monthly Customer Charge as stated in designated sales rate

    • Monthly Administrative Fee	$800
      Monthly Remote Meter Charge	$80

    • Use and Loss: MGU shall retain .75% of all gas received to compensate it for the company-use and lost-and-unaccounted-for gas.
    • Customers that choose to take service under Rates T-1 or T-2 are prohibited from taking sales service for five years.
    • Unauthorized Gas Usage Charge of $10 per Mcf for all gas taken by the customer in excess of the cumulative volume delivered to the Company on behalf of the customer.
    • Storage Charge: Customer may store up to 10% of the Annual Contract Quantity without charge; month end balances that exceed 10% of the ACQ will be charged a storage charge of $0.10 per Mcf per month.
    • System Supply Entitlement Charge (Optional): Backup service only available to Rate Firm Transportation Service customers at a maximum rate of $1.50 per Mcf, discountable down to $0.20 per Mcf.
    • Transition Charge: Maximum of $0.50 per Mcf, discountable to $0.00 per Mcf, applied to all transportation customers volumes for the recovery of take-or-pay costs, minimum bill costs, and excess pipeline fixed costs.
    • No assignment of upstream pipeline capacity.
    • All customers are eligible to participate in the transportation program.

U-8924: Consumers Power Company Gas Transportation Program:

• February 19, 1987 the Commission initiated Case No U-8678 to investigate and develop appropriate rates, charges, and conditions of service for the provision of Consumers' (now Consumers Energy Company) gas transportation service (reference MPSC Orders page, U-8768 Order page 35).
• December 7, 1989 the Commission issued its final order (U-8678, U-8924, and U-9197) in the combined transportation and rate case (reference MPSC Orders page, U-8924 Order). The Commission established two transportation rate classes: 1) Rate T-1 with a cost-of-service-based transportation charge and 2) Rate T-2 with a market-based transportation charge. The T-1 transportation charge was set at $0.4734 per Mcf, while the T-2 rate was negotiated by Consumers and the customer within a maximum of $0.7101 per Mcf to a minimum of $0.2367 per Mcf (approximately 50% above and below the T-1 rate). Except for the transportation charges, Rates T-1 and T-2 were identical in every respect and included the following rates and provisions:
  • All customers are eligible to participate in the transportation program.

• • Use and Loss: Consumers shall retain 1.03% of all gas received to compensate it for the company-use and lost-and-unaccounted-for gas.
  • Customers that choose to take service under Rates T-1 or T-2 are prohibited from taking sales service for five years.
  • Unauthorized Gas Usage Charge of $10 per Mcf for all gas taken by the customer in excess of the cumulative volume delivered to the Company on behalf of the customer.
  • Monthly Load Balancing: Customer may store up to 8.5% of the Annual Contract Quantity without charge; month end balances that exceed 8.5% of the ACQ will be charged a storage charge of $0.041 per Mcf per month, plus 2.0% fuel injection charge.
  • System Supply Entitlement Charge (Optional): Customers have the choice of purchasing backup service at a maximum rate of $1.00 per Mcf, discountable down to $0.10 per Mcf.
  • Take-or-Pay: Transportation customers are subject to take-or-pay charges as approved by the Commission for recovery.
  • No assignment of upstream pipeline capacity.

U-8635: Michigan Consolidated Gas Company Gas Transportation Service Program.

• December 17, 1986 the Commission issued an Order and Notice of Hearing to commence a contested case proceeding regarding gas transportation service and related matters on the MichCon system (reference MPSC Orders page, U-8635 Order). This case was eventually merged with Rate Case No. U-8812.
• December 22, 1988 the Commission issued its final Order (U-8635, U-8812, and U-8854) in the combined transportation and rate case (reference MPSC Orders page, U-8635 Order). The Commission established two transportation rate classes: 1) Rate T-1 with a cost-of-service-based transportation charge and 2) Rate T-2 with a market-based transportation charge. The T-1 transportation charge was set at $0.452 per Mcf, while the T-2 rate was negotiated by MichCon and the customer within a maximum of $0.67 per Mcf to a minimum of $0.23 per Mcf (approximately 50% above and below the T-1 rate). Except for the transportation charges, Rates T-1 and T-2 were identical in every respect and included the following rates and provisions:
  • All customers are eligible to participate in the transportation program.

• • Use and Loss: MichCon shall retain 1.78% of all gas received to compensate it for the company-use and lost-and-unaccounted-for gas.
  • Customers that choose to take service under Rates T-1 or T-2 are prohibited from taking sales service for five years.
  • Unauthorized Gas Usage Charge of $10 per Mcf for all gas taken by the customer in excess of the cumulative volume delivered to the Company on behalf of the customer.
  • Monthly Load Balancing: Customer may store up to 10% of the Annual Contract Quantity without charge; month end balances that exceed 10% of the ACQ will be charged a storage charge of $0.0285 per Mcf per month, plus 0.9% fuel injection charge.
  • System Supply Entitlement Charge (Optional): Customers have the choice of purchasing backup service at a maximum rate of $2.00 per Mcf, discountable down to $0.30 per Mcf.
  • Transportation customers are subject to take-or-pay charges as approved by the Commission for recovery.
  • No assignment of upstream pipeline capacity.

U-7991: December 17, 1986 the Commission dismissed the Petition for Rulemaking by the Association of Businesses Advocating Tariff Equity (reference MPSC Orders page, U-7991 Order). This case was a generic proceeding to investigate gas transportation in Michigan. In its order the Commission held that:

• The investigation of gas transportation initiated by this proceeding should be closed.
• Rulemaking is not an appropriate method for developing a new gas transportation policy.
• The new gas transportation policy should be developed through a case-by-case approach that would allow the Commission flexibility to address issues that are unique to each gas utility.

Prior to 1989

Beginning in December of 1988, the Commission used its general rate making authority to establish transportation tariffs for Michigan Consolidated Gas Company, then for Consumers Power Company (now Consumers Energy Company), Michigan Gas Utilities Company, Michigan Gas Company (now SEMCO Energy Gas Company), Southeastern Michigan Gas Company (now SEMCO Energy Gas Company), and Wisconsin Public Service Corporation. Prior to the Commission establishing transportation tariffs under the Commission general rate making authority under Act 3 of 1939, utilities in Michigan offered transportation service under individual contracts pursuant to Act 9 of 1929 and/or Special Contracts approved by the Commission pursuant to Act 300 of 1909. Peninsular Gas Company and Northern States Power Company (now Xcel Energy) still offer transportation service to end-users through individual contracts pursuant to Act 9 of 1929, or Special Contracts approved by the Commission.

November 13, 1986:

Utilities without Transportation Tariffs: The Commission did not require all utilities to use Act 3 tariffs to provide transportation service.

• Xcel Energy (formerly Lake Superior District Power Company, then Northern States Power Company):
  • U-8605: On February 10, 1987 the Commission approved a special contract to allow Xcel (then LSDPCo) to provide partial firm-interruptible natural gas service (special sales service) to Bessemer Plywood Co (reference MPSC Orders page, U-8605 Order).
  • U-9286: On February 23, 1989 the Commission approved a special contract to allow Xcel (then NSP) to provide interruptible natural gas service (special sales service) to Grand View Hospital (reference MPSC Orders page, U-9286 Order).

• Peninsular Gas Company:
  Act 9 Transportation: On July 1, 1988, Peninsular entered into an Act 9 contract to provide Peninsula Copper Industries with natural gas transportation service with the following rate provisions:
  • Monthly Customer Charge of $1,000
  • Supply Reservation Charge: $0.34 times first 5,000 Mcf of monthly portion of nominated annual contract, and $0.30 times the balance of its monthly portion.
  • Transportation Charge: $0.33 per Mcf for first 60,000 Mcf, and $0.33 per Mcf for the balance transported for the year.
  • Monthly Balancing: Peninsular will retain customer's excess deliveries up to 5% of customer's consumption in that month. Peninsular will, at its discretion retain additional volumes and charge customer $0.12 per Mcf for the service. If Customers use more gas than it caused to be delivered to the system in a given month, then such excess consumption shall be deemed to have been purchased from system supply under Peninsular's regular Interruptible Sales Rate.

• Wisconsin Public Service Corporation:
  Prior to Commission approval of a transportation tariff (on 2/5/01 - see U-12741) WPS had individual Act 9 contracts covering 12 transportation customers on file with the Commission. All of the contracts were self-implemented as negotiated contracts between WPS and the individual customers. Six of the contracts have been subsequently revised and approved by the Commission in order to modernize them and make them all uniform. All of the contracts have daily balancing (page 10, Article X) and monthly balancing (page 8, Article IX) provisions. Six of the contracts were signed as initial contracts in 1997 and 1998, while the Commission approved amendment to five of the contracts in Case No. U-11581, dated January 28, 1998 and one in Case No. U-11663, dated April 28, 1998 (reference MPSC Orders page, U-11581 order, and U-11663 order). The Contacts have uniform provisions and include the following provisions:
  • Surcharge for Unauthorized Use of Gas: Customers shall be required to pay a minimum penalty of $20 per Dth for unauthorized use of gas during a period of curtailment. When WPS is exposed to penalties in excess of $20 per Dth, then the minimum penalty rate shall increase to $10 per Dth plus any incremental costs incurred to serve customers. Incremental costs will include, but are not limited to, any ANR penalty rates exceeding $100 per Dth, or the actual per Dth rate of any gas purchased to the extent that it exceeds the $100 per Dth.
  • Daily Balancing: Using the daily balancing service must be placed in either a third party pool or a WPS sponsored pool. The pools will be separately balanced. The following rates apply:

    % Difference From Nomination	Floor Rate per therm	Ceiling Rate per therm	Effective Rate per therm
    >0% to 25	$0.0045	$0.1216	$0.0207
    >25%	$0.0457	$0.1673	$0.1333

    In addition to balancing rates, all customers will be assessed their prorated share of pipeline penalties assessed to WPS.
  • Constraint Day Balancing: High Flow Constraint Day - buyer may consumer the full amount of buyer's approved daily nomination as recognized by ANR, plus any nominated Peak Day Backup/Annual Supply Backup commodity. Any amounts consumed in excess of backup supplies shall be billed the Surcharge for Unauthorized Use of Gas. Daily balancing fees will be applied to usage below nominations. There will be no waiver of any penalties or fees. Buyer will be given notice of a High Flow Constraint Day at least two hours prior to start.
  • Low Flow Constraint Day - buyer must use at a minimum its approved daily nomination as recognized by ANR. If WPS is not charged a penalty by ANR, then normal balancing charges apply. If WPS is assessed penalties from ANR, then buyer's undertake volumes will be assessed the ANR penalty rate in place of the normal balancing fee. Buyer will normally be given 24 hours notice prior to a Low Flow Constraint Day.
  • Monthly Balancing: For usage more than nomination (negative imbalance), the customer shall purchase from WPS the monthly imbalance amount at 103% of the Indexed Price of gas commodity for that month, times the Rate Payment Adjustment for each block of gas, plus the D2 demand charge listed in the currently effective Michigan Gas Cost Recovery Plan, plus the Dakota Cost listed in the currently effective plan, plus any authorized surcharges in the currently effective plan.

    Usage Percentage of Nomination	Rate Payment Adjustment
    >103.5% up to 110% of total	100%
    >110% up to 115% of total	120%
    >115% up to 120% of total	130%
    >120% of total	150%

    For usage less than nomination (positive imbalance), the WPS shall purchase from customer the monthly imbalance amount at 97% of the Indexed Price of gas commodity for that month, times the Rate Payment Adjustment for each block of gas, plus the D2 demand charge listed in the currently effective Michigan Gas Cost Recovery Plan, plus the Dakota Cost listed in the currently effective plan. For usage less than nomination, the following schedule applies:

    Usage Percentage of Nomination	Rate Payment Adjustment
    >3.5% up to 10% of total	100%
    >10% up to 15% of total	80%
    >15% up to 20% of total	70%
    >20% of total	50%

Special Contracts under Act 3:

The Commission has continued to approve utilities' requests for special contracts to serve customers whose special needs cannot be met through application of the transportation tariffs.

Bypass:

On June 16, 1988 National Steel Corporation won a summary judgment against the Commission in the U.S. District Court, File No. L87-30-CA5, Honorable Robert Holmes Bell presiding, which allowed it to attach directly to Panhandle Eastern Pipe Line Company bypassing Michigan Consolidated Gas Company. Several other large industrial customers have threatened to bypass utilities in Michigan, but no others have actually executed a bypass.

Diversion of Customers' Gas:

The gas curtailment rules for utilities in Michigan have been modified to recognize that some of the gas on the utilities' system is now owned by third parties, including customers. Essentially the new rules provide that the utilities may not divert gas owned by transportation customers for the use of sales customers. This assures transportation customers that during periods of curtailment they are entitled to receive the gas that they have caused to be delivered to the system. For example, on February 23, 1995 the Commission revised Michigan Consolidated Gas Company's tariff provisions (reference U-10603 Order). Consumers Energy Company had their tariffs revised per a February 25, 1998 order (reference U-11108 Order), and Michigan Gas Utilities had their tariffs revised per Commission order dated November 25, 1997 (reference U-11439 Order). See also MPSC Orders page.

Gas Storage Rates:

Storage Rates

Rate Books - MPSC approved rates

Gas Tariffs - FERC approved rates

Michigan has established gas storage rates for two of its LDC's, and has also set rates for five storage companies. Most of the rates are market-based and are designed to provide the maximum flexibility to the companies and their customers to develop the services and rates necessary to meet the needs of the customers. The other rates are cost-based.

• Market-based storage rates
  The first market-based storage rate was set in February 1994 for Michigan Consolidated Gas Company (MichCon) in Case No. U-10150 (reference MPSC Orders page, U-10150 Order, U-10150 order denying rehearing). The MichCon storage rate, Rate Schedule No. CS-1, provides for storage agreements of up to five years, and are subject to interruption on system peak days. Rates include a $300 per month Administrative fee, a storage charge of up to $1.50 per Mcf consisting of a demand portion and a commodity portion, and a fuel injection charge of 0.9% of gas injected. Storage rates for Consumers Energy Company, Lee 8 Storage Partnership, and Washington 10 Storage Corporation are similar in structure to the MichCon storage rate. Lee 8's rates were approved by the MPSC in docket number U-10602 by order dated September 27, 1994 and order dated April 13, 1995. WPS-ESI Gas Storage also has market-based storage rates (approved in Case No. U-12209 in order dated February 22, 2000). Current rates (including transportation) provide for a monthly deliverability charge of up to $5.328 per Mcf, a monthly capacity charge of up to $1.045 per Mcf, and use charges of up to $0.0328 per Mcf for injection and withdrawal. These charges are also flexible downward to meet market conditions. Bluewater Gas Storage market-based storage rates were approved in Case No. U-13776 in order dated July 8, 2003. Current rates (including transportation) provide for a monthly deliverability charge of up to $5.00 per Mcf, a monthly capacity charge of up to $1.00 per Mcf, and use charges of up to $0.016 per Mcf for injection and $0.00 for withdrawal. These charges are also flexible downward to meet market conditions. The maximum effective rate for 100-day firm seasonal storage service is $1.616 per Mcf plus 1.5% fuel.
   
• Cost-based storage rates
  In addition to market-based storage rates, the MPSC has two storage companies that provide service under cost-based rates. Eaton Rapids Gas Storage System was granted cost-based rates in Case No. U-9369 in 1990 (reference MPSC Orders page, U-9369Order). Current rates provide for a monthly deliverability charge of $2.2993 per Mcf, a monthly capacity charge of $0.0207 per Mcf, and fuel use charges of 1.9% for injection and 1.7% for withdrawal. These charges are flexible downward to meet market conditions. Washington 10 Storage Corporation also has cost-based storage rates in addition to its market-based rates (approved in Case No. U-10424 in order dated April 24, 1997). Current rates provide for a monthly deliverability charge of $2.4788 per Mcf, a monthly capacity charge of $0.0238 per Mcf, and fuel use charges of 0.72% for injection and 0.72% for withdrawal.
   
  
• FERC-approved storage (and transportation) rates
  For storage of gas in interstate commerce, the Federal Energy Regulatory Commission (FERC) has also approved rates. Some of the companies provide all of their service in interstate commerce subject to FERC-approved Gas Tariffs. For the other companies below that provide some of their services in interstate commerce subject to FERC regulation, FERC has approved rates that are based on costs filed either with the MPSC or the FERC.  To access FERC Order documents, visit the FERC Online elibrary Docket Search.
   

  Company	FERC docket number	FERC Order date approving transportation rates	Market- based rates
  Consumers Energy Company	PR11-100-000	September 27, 2011	no
  Michigan Consolidated Gas Company	PR13-3-000	March 14, 2013	yes
  Jackson Pipeline	CP90-768-000	June 8, 1990, approving a blanket certification, Statement of Operating Conditions	no
  Company	FERC docket number	FERC Order date approving storage rates	Market- based rates
  Lee 8 Storage Partnership	PR10-124-000	July 7, 2011	no
  Washington 10 Storage Corporation	PR12-10-000	April 25, 2012	yes
  Eaton Rapids Gas Storage System	CP90-769-000	June 8, 1990 (approving a blanket certificate)	no
  BGS Kimball Gas Storage, LLC	CP04-80-000	July 13, 2004 (approving a blanket certificate)	yes
  Bluewater Gas Storage	RP13-43-000	March 18, 2013	yes

  
  FERC regulations regarding FERC rate approval of Michigan companies:

  Under FERC regulation Section 284.224 (Certain transportation and sales by local distribution companies), LDCs can get a blanket certificate that authorizes the LDC, as a Hinshaw pipeline, to engage in the sale or transportation of gas that is subject to FERC jurisdiction. Both Consumers and MichCon have blanket certificates. Consumers Energy has one via FERC order in docket CP90-272-000 dated February 7, 1990 (cited as 50 FERC 62,082) and MichCon has one per FERC order in docket CP80-340-000 dated July 16, 1980 (cited as 12 FERC 61,044). FERC orders and regulations are available www.ferc.gov.

  A “Hinshaw Pipeline” refers to the “Hinshaw exemption” of the Natural Gas Act of 1938, which comes from the Hinshaw Amendment to the NGA enacted by Congress in 1954. The amendment appears in NGA Section 1C codified as 15 U.S.C. § 717(c), which exempts interstate transportation received and consumed within a State provided that the rates and service are regulated by a State commission.

  Under a Section 284.224 blanket certificate, an LDC must select a method to be used to for calculating rates. The choices are Section 284.224(e)(1) and Section 284.224(e)(2). They are used to define the rate choices that the LDC has under FERC regulation Section 284.123. If the LDC does not have rates on file for city gate service, and also does not have existing rates approved by the state commission or a FERC approved methodology for proposed rates, then it must, under Section 284.123(b)(2), apply for FERC rate approval for each transaction under the blanket. Otherwise, the rates are set under Section 284.123(b)(1) under either a rate methodology used by the state commission, or using rates in transportation rates for intrastate service.

  Under FERC regulation Section 284.123 (Rates and Charges), an LDC with a blanket certificate must either choose to elect a method to have its rates approved (Section 284.123(b)(1)), or instead apply to the FERC for rate approval (Section 284.123(b)(2)).

  Under Section 284.123(b)(1), there are three choices: Use the same methodology, for designing rates to recover costs, that was used in current rates filed with the state regulatory agency; Use the same methodology used in determining allowances in rates filed with the state regulatory agency; or Use the same rates on file with the state regulatory agency for intrastate city gate service.

  Under Section 284.123(b)(2), the LDC must apply to the FERC for rate approval, and information showing the proposed rates and charges are fair and equitable.

  Consumers and MichCon use different rate methods.

  DTE Gas Company

  DTE Gas Company (formerly MichCon), when it first applied for a blanket certificate, did not have existing rates for comparable city gate service on file with the MPSC. It did, however, have rates approved by the MPSC. It therefore made a rate election under Section 284.123(b)(1)(i).

  In FERC docket PR94-9-000, MichCon filed to change its rate election pursuant to section 284.123(b)(1) of the Commission's regulations, for rates to be charged for the transportation or storage of natural gas under its section 284.224 blanket certificate. (See order dated July 19, 1994). MichCon requested the change because, effective January 3, 1994, it now had three new rate schedules for intrastate transportation that are comparable to Part 284 service. MichCon requested to change its election under Section 284.123(b)(1) to use the intrastate rates per section 284.123(b)(1)(ii) for all new contracts effective on or after April 1, 1994. This allowed MichCon to use the same state-approved rates for transportation and storage transactions under its blanket certificate as it uses for comparable intrastate transportation service.

  In FERC docket PR09-10-000, MichCon file for market based rates effective June 12, 2009.

  In FERC docket PR10-47-000, MichCon filed to change its rates to reflect cost-based transportation rates approved by the MPSC in its June 3, 2010 order in Case No U-15895 as rates for interstate transportation service effective August 27, 2010.

  In FERC docket PR13-3-000, MichCon filed to change certain rates for market-based transportation and storage rates effective 10/19/12.

   

  Consumers Energy Company

  Consumers, in its blanket certificate, chose the option under Section 284.123(b)(2). Under this section, it must seek FERC approval of each rate. In its application for a blanket certificate, Consumers applied for approval of its transportation rate. Consumers' most recent application is listed above.

  Consumers has therefore, by not choosing a rate method under '284.123(b)(1), opted to apply for rate approval for each rate. If Consumers were to desire to use '284.123(b)(1), then it would have to apply to the FERC to change its rate election as MichCon did.

  In FERC docket PR10-25-000 and PR11-100-000, Consumers cancelled its statement of operating conditions and blanket certificate.

For more storage rate information, see Rate Books for MPSC-approved rates and Gas Tariffs for FERC-approved rates in Michigan.

Transportation Off-System Service Rate:

DTE Gas Company (formerly Michigan Consolidated Gas Company, or MichCon) provides transportation service to customers that wish to move gas solely through MichCon's transmission lines for redelivery to another gas company. Rates for this service can be found in the DTE Gas Company rate book beginning on sheet No. E-34.00.

SEMCO Energy Gas Company received approval for off-system rates in case U-11766 in an order dated September 23, 1998.

For interstate service subject to FERC regulations, see FERC-approved rates above.

Utility Sales Special Rate Programs:

From 1982 through 1986, Michigan pursued industrial load retention by use of three special sales programs. The first of these programs was initiated by the FERC and was called the Special Marketing Program (SMP). The first SMP to receive FERC approval was the DF-1 rate schedule for the ANR Pipeline Company. The DF-1 rate was available to gas distribution utilities only for resale to certain large industrial customers who had the installed capability to use an alternate fuel, and who could obtain that alternate fuel at a price which would cause them to cease using natural gas if they could not obtain DF-1 service. SMP's and all similar discount rates were based upon the fundamental premise that the incremental cost of natural gas was less than the average cost. For example, for ANR customers, the average cost of gas in 1985 was approximately $4.10/ Dth, while the incremental price was only $3.00/Dth. This made it possible to compete for market share by selling gas on an incremental basis rather than on an average basis. The Michigan Public Service Commission approved SMP rates for gas utilities from 1982 until 1985, when the District of Columbia Court of Appeals ruled that the SMP's were unduly discriminatory.

The MPSC also approved its own special discount rates for industrial customers with alternate fuel capability, referred to as alternate discount rates (ADR's). An example of this type of rate was Michigan Consolidated Gas Company's Rate 4, which was approved by the MPSC in its Order in Case No. U-7609, dated November 22, 1983 (reference MPSC Orders page, U-7609Order). Rate 4 was available to any customer who had the installed capability to use an alternate fuel in place of natural gas, and who could obtain that fuel at a price which would have caused the customer to cease using natural gas. The commodity charge was set at a level which was designed to be competitive with alternate fuels. Since the ADR's were available to all customers with viable alternate fuel capability, they avoided the "undue discrimination" problem of the SMP rates. ADR's were gradually replaced by transportation service starting in 1984.

Finally, some industrial customers were placed on special contract rates. Special contracts have been used in Michigan to allow maximum flexibility in pricing. Utilities utilizing special contract pricing were able "...to obtain the maximum spread possible given market conditions and the unique situation of each customer". (reference MPSC Orders page, U-7895 Order, p.31). Special contracts were also gradually replaced by transportation service in the mid-1980s.

Miscellaneous Notes:

• Take-or-Pay costs that interstate pipelines billed to utilities were recovered from transportation customers and sales customers. The lump sum portions (called "direct billed costs") of take-or-pay costs were allocated to total utility throughput, including use and loss, on a volumetric basis. The resulting surcharge was assessed to all transportation customers on a volumetric basis. The MPSC monitored the recovery of take-or-pay costs in Gas Cost Recovery Plan and Reconciliation cases.
• SSEC: The System Supply Entitlement Charge was an optional surcharge that consisted of the fixed-cost portion of the gas supply for sales customers. It was calculated in Gas Cost Recovery Plan cases. Payment of the charge entitled the transportation customer to use sales service. Very few transportation customers (less than 4% by volume) exercised their option to pay the System Supply Entitlement Charge for reserving sales service as a backup service. Under the various transportation programs, no backup service was required.