Michigan Attorney General Dana Nessel and other intervening parties reached a settlement, approved this week by the Michigan Public Service Commission (MPSC), to reduce Consumers Energy’s latest natural gas rate hike by nearly 75%.
Consumers Energy initially requested to increase revenues from their ratepayers by $136 million, while this settlement allows for only $35 million in additional revenue.
The settlement also provides for a bill credit to be applied to Consumers Energy natural gas customer’s bills over a three-year period due to the sale of the company’s home service plan program.
Consumers Energy’s request to increase revenues by $136 million, a 5.7% increase in natural gas rates for the company’s customers, was initiated in December 2023. The attorney general filed testimony that taking into consideration current rates, Consumers Energy should only receive a rate increase of approximately $5.3 million. She also opposed the company’s proposed $5.00 increase to monthly service charges for residential customers, which would increase the charge from $13.60 to $18.60 and its proposed $3 increase for small commercial customers, which would increase the charge from $16.00 to $19.00 monthly. In response to issues raised in testimony from the Attorney General and other parties, Consumers Energy reduced its own requested rate increase to approximately $113 million.
As part of the case, Consumers also sought approval to split the proceeds from the sale of its home services product business 50-50 with its customers. The attorney general opposed Consumers Energy’s proposal to retain half of the proceeds for the likely benefit of its shareholders instead of returning 100% of the proceeds to ratepayers who made the home service program possible. She filed testimony supporting returning 100% of the proceeds to ratepayers, since before the sale of the program, 100% of its net revenues had gone to the benefit of ratepayers.
The settlement agreement provides for an increase in base rates of only $35 million, or just over one-fourth of the requested Consumers revenue hike. Consumers Energy also agreed to reduce the proposed increase in monthly service charges to $1.40 for residential customers (to $15) and $2.00 for small commercial customers (to $18) as part of the settlement.
In addition, the parties agreed to return the benefits from the sale of the home service plan business to ratepayers in a 25%-75% split of the proceeds with Consumers pocketing 25% of the proceeds, which it can use to supplement any revenue needs it has during the October 1, 2024, through September 30, 2025, period implementing the revenue increase, instead of receiving it from ratepayers through further increased rates. The remaining 75% will be returned to ratepayers over three years, starting in October 2024, through a bill credit. In addition, 100% of the ongoing proceeds from a long-term service agreement that Consumers entered with the buyer of the business will be credited to ratepayers.
The settlement results in an average rate increase of 1.5% for residential ratepayers before the home service program bill credit. After the credit is applied, the net increase for ratepayers will be just 0.1% for the fiscal year beginning in October 2024.
Consumers Energy sells electricity to approximately 1.9 million customers throughout Michigan and natural gas to 1.8 million customers across the state.
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