The Michigan Public Service Commission has approved a rate increase of $143,531,000 for Consumers Energy Co. gas customers. It also approved a return on common equity (ROE) of 9.9%.
Consumers had sought an increase of about $229 million in its retail rates for natural gas distribution over rates that were approved in August 2018 when the Commission approved a Consumers gas rate increase of $10.6 million. In awarding the significant increase on the heals of an earlier hike, it pointed out that Consumers Energy is expected to increase gas transmission and distribution infrastructure investments, accelerate the removal of at-risk lines made of vintage materials, and enhance technology capabilities through metering and customer-facing applications for improved customer service. In the current case, the commission approved $159 million in capital expenditures for the test year associated with the Saginaw Trail Pipeline and spending by the utility of $100 million starting in 2020 to replace high-risk cast iron or bare steel underground lines that deliver natural gas to customers through its Enhanced Infrastructure Replacement Program.
The Commission found that ROE of 10.75% proposed by the company is excessive, especially in light of the fact that nationally, ROEs have been trending downward. Additionally, since December 2016, the commission has issued orders for Consumers and DTE Gas (the state’s other major natural gas local distribution utility) adopting ROEs of 10.10%, 10.10%, 10%, and 10%, respectively. According to the commission the gradual ROE reduction reflects the improved economy in Michigan and the decreased business and financial risk. It also found that the company’s previously-approved revenue decoupling mechanism has reduced the company’s risk. Consumers Energy Co., Case No. U-20322, Sept. 26, 2019 (Mich.P.S.C.).