MPSC Approves Settlement Agreement Authorizing Consumers Energy Company to Increase Electric Rates

Contact:  Judy Palnau, 517-241-3323
Agency:  Michigan Public Service Commission

May 15, 2013 - The Michigan Public Service Commission (MPSC) today approved a settlement agreement authorizing Consumers Energy Company to increase its electric rates by $89 million annually, effective May 16. 


A residential customer using 500 kilowatt-hours (kWh) of electricity per month will see an increase of $1.67 on their monthly bill over self-implemented rates.


Consumers Energy on September 19, 2012 filed an application requesting a $148.3 million rate increase.  The final amount approved today ($89 million) is 40 percent below what the utility requested and represents an increase of 2.3 percent over the rates set in its last electric rate case (Case No. U-16794).


Because the amount approved is below the amount the company began to self-implement on March 19 ($110 million), the MPSC has directed the utility company to refund to its electric customers approximately $21 million on an annual basis, plus interest, subject to reconciliation. The utility must file a reconciliation application with the MPSC within 60 days regarding the refund.


Under the terms of the settlement, the rate increase reflects an authorized rate of return on common equity of 10.3 percent, use of the 50/25/25 cost of service allocation method for transmission and production costs, and the exclusion from rate base of any unamortized balance of environmental clean-up costs.


The settlement resolves all issues in the case with the exception of certain issues related to the utility's advanced metering infrastructure program, including the amount of the fee associated with choosing to opt out of the program.


The utility, MPSC staff, the Attorney General, the Association of Businesses Advocating Tariff Equity, the Michigan State Utility Workers Council, et al, the Michigan Community Action Agency Association, The Kroger Company, the Municipal Coalition, FirstEnergy Solutions Corp., Energy Michigan, Michigan Cable Telecommunications Association and the Midland Cogeneration Venture Limited Partnership participated in the settlement. Hemlock Semiconductor Corporation and Michigan Environmental Council/Natural Resources Defense Council submitted statements of non-objection to the settlement.


The MPSC is an agency within the Department of Licensing and Regulatory Affairs.


Case No. U-17087


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