Michigan Commission Slashes Consumers Energy’s Rate Hike Request by 75 percent

The Michigan Public Service Commission approved a settlement agreement authorizing Consumers Energy Company to raise its natural gas distribution rates by about $35 million, effective Oct. 1, 2024. The amount approved is significantly lower than the $136 million that the utility initially requested.

Under the agreement, Consumers Energy will receive a rate of return of 9.9 percent on common equity, with a common equity ratio of 50 percent. The initial request from the company was a 10.25 percent rate of return on common equity, with a common equity ratio of 51.5 percent. The company’s last rate increase for natural gas service was $95 million approved in August 2023.

The agreement also laid out conditions on several other transactions of the utility. For example, Consumers is required to share the gain of about $110 million it received from the sale of its unregulated home energy products program to a third party buyer. The company will allocate $27.5 million of this amount to close its revenue deficit, while the remaining $82.5 million will be paid out to customers over a period of three years. For a customer who has a monthly gas consumption of 100 ccf, this would translate to a decrease of $0.27 in their monthly gas bill.

Additionally, the settlement allows Consumers Energy to allocate $215.3 million on its Enhanced Infrastructure Replacement Program, from now until Sept. 30, 2025. The program seeks to build a more robust and resilient gas pipe network, eliminating and replacing any high risk pipes.

The commission also approved a settlement authorizing Alpena Power Company to raise its electric service revenue by $2.5 million, on the condition that the utility will not request another hike until January 2026. The last approval for a rate increase by Alpena Power was in January 2022, for an amount of $1.25 million. This time, the company had made an initial request of nearly $4 million, which was negotiated down by 37 percent to $2.5 million. Alpena Power’s new rates are effective immediately. For a customer with a monthly electric power consumption of 500 kilowatt-hours, this translates to an increase of $9.07 on their monthly bill.