MPSC Approves Settlement Agreement Increasing Consumers Energy Company's Natural Gas Rates by $22.4 Million Annually, 75 Percent Below What the Utility Requested

Contact: Judy Palnau (517) 241-3323

The Michigan Public Service Commission (MPSC) today approved a settlement agreement authorizing Consumers Energy Company to increase its natural gas rates by $22.4 million annually.  The increase is 75 percent below what the utility requested.

The average Consumers Energy residential customer will see an increase of $1.20 on their monthly natural gas bill.

"The rate increase approved today is minimized by a creative approach taken in the order on the depreciation case also issued today (Case No. U-15629)," noted MPSC Chairman Orjiakor Isiogu.  

The settlement agreement (Case No. U-15506) directs the utility not to file a new general rate case seeking an increase for the distribution of natural gas before May 1, 2009.  It also is related to a partial settlement agreement submitted in Case No. U-15629 that proposes revised interim depreciation rates for gas utility plant, decreasing the utility's depreciation expense by $19.6 million annually.  The interim depreciation rates are to be implemented simultaneously with the retail gas distribution rates approved in this case.

The utility filed an application with the MPSC on Feb. 18 seeking authority to increase its rates for the distribution of natural gas by $91.1 million annually and for other relief.

The utility, MPSC staff, the Attorney General, the Association of Businesses Advocating Tariff Equity (ABATE), the Michigan Community Action Agency Association, and the Michigan State Utility Workers Council, Utility Workers Union of America, AFL-CIO participated in the settlement in Case No. U-15506.

In Case No. U-15629, the following participated in the settlement:  Consumers Energy, the MPSC staff, ABATE, and the Attorney General.

A fact sheet with details follows.

The MPSC is an agency within the Department of Labor & Economic Growth.

Case Nos. U-15506 and U-15629 

Consumers Energy Company

Gas Division

Case No. U-15506

Commission Order Fact Sheet

1.      Revenue Deficiency:                        $22,400,000

2.      Rate of Return on Common Equity:  10.55%

3.      Debt to Equity Ratio:                       50.3% Debt - 49.2% Equity

4.      Pre-tax CAP* Carrying Cost Rate:     11.44%

5.      The End-user Transportation Customer Gas in Kind Percentage will decrease from 1.20% to 1.09%    

6.      Consumers agrees not to file a new rate case to increase natural gas base rates prior to May 1, 2009.

7.      Consumers agrees that when filing its next general rate case, the Company will use a projected test year and if filing on a date other than January 1, the Company will provide a complete reconciliation of the projected test year to the most recent historical calendar year.

8.      All parties agree that the Commission's approval of the Partial Settlement Agreement Regarding Depreciation Rates submitted by the parties in Case No. U-15269 is a necessary component of this U-15506 Settlement Agreement.

9.      The Residential Customer Charge (monthly charge) for Rate A and Rate A-1 customers will increase fifty cents from $9.00 to $9.50.

10.    The General Service Customer Charge for GS-1 customers will increase fifty cents from $10.00 to $10.50.

11.    The General Service Customer Charge for GS-3 customers will increase from $468 to $482.

12.    The Customer Charge for Small Transportation customers will increase from $480 to $510; Large Transportation customers from $2,780 to $2,830; and Extra-Large Transportation customers from $6,900 to $7,210.

*CAP - Customer Attachment Program under Rule B11.I