Indiana Hikes Limits Customer Charge Change

Indiana. The Indiana Public Utility Regulatory Commission has approved a settlement agreement authorizing Indiana Michigan Power Company to increase electric rates by $96.8 million. The electric utility is also required to provide a $4 million credit to customers to reflect the impact of the federal Tax Cuts and Jobs Act of 2017 for the period before new base rates go into effect. The settling parties agreed the company’s ROE will be 9.95%, which results in a reduction in the test year revenue deficiency of $13.1 million as compared to revenues that would be required under the utility’s initial ROE request of 10.6%. The settlement agreement further provides that the ROE will be reduced to 9.85% beginning January 1, 2019 to be used on all of Indiana Michigan’s capital riders until its next base rate case. Another significant aspect of the agreement reduced the company’s proposed increase in the customer charge component of rates. Indiana Michigan had initially proposed to increase the residential service customer charge from $7.30 to $18.00 per month, which would be a 147% increase. Under the settlement agreement, the utility will increase the residential customer to $10.50 for standard residential service and $11.50 for residential time of day rates. The commission found that the increase in the fixed charge as compared to the company’s existing rate is cost-based and consistent with the concept of gradualism. Re Indiana Michigan Power Co., Cause No. 44967, May 30, 2018 (Ind.U.R.C.)

Maryland Approves Rate Cut Settlement

Maryland. The Maryland Public Service Commission has approved a settlement agreement reducing electric distribution rates for Potomac Electric Power Company (Pepco) by $15 million.

Under the terms of the approved settlement, $9.7 million in tax savings will be returned within 60 days to residential customers in a one-time, $10.09 bill credit. The company’s cost of equity will remain at the 9.50% or the rate approved in its last base rate proceeding, and Pepco will not file a base rate case earlier than December 15, 2018. The commission acknowledged that while there may be an effective reduction in base rates, certain classes of customers, including residential customers, will not see a decrease from their current bills. It explained that the prices per kWh for some classes will increase over the tariffed prices that are in effect as a result of Pepco’s Bill Stabilization Adjustment (BSA), which increases or decreases the base rate based on a formula that stabilizes Pepco’s monthly distribution revenue. In reviewing the BSA adjustment figures, the commission found that current rates are not providing Pepco with the revenue it was authorized in its most recent rate case. Thus, despite the significant revenue reduction, for certain classes, customer bills will actually increase on a per KWh basis from their current amount. Re Potomac Electric Power Co., Case No. 9472, Order No. 88719, May 31, 2018

Michigan Orders Cuts to Reflect Federal Corporate Tax Reduction

Michigan. The Michigan Public Service Commission has approved settlement agreements with seven utilities to pass on to ratepayers their savings realized as a result of the reduction in corporate tax rates under the Tax Cuts and Jobs Act of 2017. Savings to consumers totaled $50,278,473 for the seven companies. Three other utilities had no impact from the changes. Filings were approved for Alpena Power Co., DTE Gas Co., Michigan Gas Utilities Corp., Northern States Power, SEMCO Energy Gas Co., and Upper Michigan Energy Resource Corp. (UMERC). There was no impact on rates for Detroit Thermal LLC, Presque Isle Electric & Gas Co-op, and Wisconsin Electric Power Co. Rulings will be announced later for Consumers Energy Co., DTE Electric Co., Indiana Michigan Power Co. (I&M), and Upper Peninsula Power Co. (UPPCo). The commission noted that customers are seeing the rate reductions more quickly than anticipated as a result of the quick response by the utilities to directives issued by the commission earlier this year.

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