MPSC approves increase in DTE Electric depreciation rates, decrease for Upper Peninsula Power Co.

FOR IMMEDIATE RELEASE   Dec. 6, 2018

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LANSING, Mich. – The Michigan Public Service Commission (MPSC) today approved updates to depreciation rates for two utilities: increasing them for DTE Electric Co. and lowering them for Upper Peninsula Power Co.

Depreciation provides for the recovery of the original cost of a utility’s current assets. Routinely updating depreciation recovery is necessary because of changes in accumulated asset costs, the remaining lives of assets, and net salvage values. The utility recovers the expenses through base rates, which are set in a utility’s general rate case.

For DTE Electric (Case No. U-18150), the Commission approved a settlement agreement to increase annual depreciation expenses by approximately $90 million. DTE had requested an increase of $156 million for its power-producing coal plants, and wind and solar generation facilities. Not included are coal plants nearing retirement in the 2020s.

The depreciation rates will be part of the formula used to determine DTE Electric’s retail rates in its pending rate case (Case No. U-20162). DTE Electric must file its next depreciation rate case by December 2024.

For UPPCO (Case No. U-18467), the Commission approved a decrease in annual depreciation expenses of approximately $1.8 million. UPPCO based part of its depreciation changes to its decision to extend the retirement dates of its McClure, Prickett, and Victoria hydroelectric facilities by 30 years beyond their existing Federal Energy Regulatory Commission (FERC) operating licenses.

UPPCO was ordered to file in its next depreciation rate case a comprehensive economic and engineering evaluation of historical and planned investments to its hydroelectric and other power production facilities. The new depreciation rates will be effective for accounting purposes on Jan. 1, 2019, and be used in determining the utility’s revenue requirements in it pending rate case (Case No. U-20276).   

Other rulings today

DTE Gas, Electric ordered to pay fines: The Commission assessed $18,000 in fines in two complaint cases against DTE Energy Co. DTE Electric Co. was ordered to pay $10,000, plus legal fees, in Case No. U-18012 involving a customer who argued the utility improperly disconnected her electric service. In another case, DTE Gas Co. was directed to pay $8,000 after failing to schedule an informal hearing within 10 business days of a customer’s request (Case No. U-18478), a violation of the MPSC’s Consumer Standards and Billing Practices. Neither fine will be recovered in rates or passed on to customers, the Commission ordered.

UPPCO IRP filing deadline extended: The Commission granted a request by the Upper Peninsula Power Co. (UPPCO) for an extension of its integrated resource plan (IRP) filing deadline (Case No. 20350). UPPCO asked for the extension after an incident at its Portage Facility rendered it inoperable. As a result, the utility is forced to significantly revise its IRP, which it indicates cannot be completed by the deadline of Dec. 14 as set by the Commission in an August order. UPPCO’s new deadline to file its IRP is Feb. 12, 2019.

Alpena Power PURPA tariff sheet approved: An updated method and avoided cost calculation for Alpena Power Co. under the Public Utility Regulatory Policies Act of 1978 was approved in a settlement agreement (Case No. U-18089) that was originally filed in June 2017. The agreement states Alpena Power will pay a qualified cogeneration and small power producer the same avoided cost rate Alpena pays to Consumers Energy Co. through 2024. After that, Alpena will pay an avoided cost rate stated in its Commission-approved tariff. Alpena will file for a biennial review by the Commission of the utility’s avoided cost data and calculations.

To look up cases from today’s meeting, access the eDockets 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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