Michigan Attorney General Mike Cox Responds to Today's Electricity Rate Orders

25 December 2005

Attorney General Mike Cox announced today that the Michigan Public Service Commission (MPSC) adopted several of his recommendations to reduce rate increases requested by Consumers Energy Company and The Detroit Edison Company.
"Because of our recommendations, and the actions of the MPSC in today's cases, ratepayers will benefit significantly," Cox said.
"In Consumers Energy's request for a general rate increase, the Commission agreed to reduce the Company's allowed profit margin by approximately $2 million per year and reduced recovery of tree-trimming expenses by $17.7 million per year based upon arguments and testimony presented by my office. The Commission reduced Consumers Energy's requested increase totaling $297.5 million per year to $86.1 million. Arguments presented by my office also supported many other reductions adopted by the Commission," Cox observed.
"The Commission's order also requires future realignment of rates among different customer rate classes, but the Commission has agreed that present method for assigning costs to the different classes of customers should be modified. My office supported this conclusion, which will help to assure that costs will not be unfairly shifted to small customers," Cox said.
The second case involved Consumers Energy's recovery of deferred costs during the next five years. Cox's office supported reducing the deferred costs to $84 million, but the Commission set those costs at $333 million.
Cox said, "I am disappointed the Commission did not spread the difference out over a much longer period as my office recommended because during the next five years, this decision will raise customers' bills. But at least, the total principal amount Consumers Energy recovers will not be increased."
In Consumers Energy's 2006 power supply cost case, the Commission agreed with the Attorney General that an additional, projected increase of $152 million should not be included in Consumers Energy's power supply cost recovery (PSCR) factor until after all the evidence in the case has been reviewed. "Even though this may not ultimately reduce Consumers Energy's total recovery, I am pleased that the Commission adopted the recommendation made by my office, which will make electricity more affordable during the beginning of this year" said Cox.
The Commission also decided two cases involving Detroit Edison today. The first case involved several proposals to shift costs from larger customers to residential customers. "In that case, testimony and briefs submitted by my office supported a new system for allocating costs, which was proposed by the MPSC's Staff, and the Commission ordered Detroit Edison to adopt the new system and to file a new rate case by July 1, 2007. I am pleased that the Commission has agreed with me that a new method and a new rate case are needed," added Cox.
In Detroit Edison's 2006 power supply cost recovery case, the Commission deferred recovery of some power supply costs. The Attorney General supported temporary deferral of rate increases in that case. The Commission adopted a proposal by its Staff to set lower, temporary PSCR factors beginning in January.
Cox said, "Deferring some cost increases to postpone some of the upcoming rate increases is a good idea, but the method approved by the Commission will -- as the Commission's orders acknowledge -- result in higher electricity bills during next summer for Consumers Energy's and Detroit Edison's residential customers. Changes in charges every three months also can shift a larger amount of the burden for higher power supply costs from larger customers to smaller customers. For example, Detroit Edison proposed a baseline charge of 0.499 cents per kilowatt-hour next summer. The Commission approved a 58% increase in that month's charge to 0.798 cents per kilowatt- hour. How much this summer increase will affect residential customers depends upon how much electricity they use. If a typical customer uses 800 kilowatt- hours in July, the increase would be approximately $6.40, which adds up to an approximate, total $12.6 million increase in July residential bills compared with Detroit Edison's proposed baseline factor.
"These power supply cost cases are just starting. My office will vigorously participate in those cases to minimize the impact of power supply cost increases upon customers," said Cox.

Source: prnewswire

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