Consumers Energy to Return $1.6 Billion in Federal Tax Cut Savings to Michigan Customers

The Michigan Public Service Commission approved Consumers Energy Company’s third round of federal tax cut adjustments, which will refund about $1.63 billion to its electric and gas customers in amounts amortized over periods of up to 44 years, according to a Sept. 26 press release. The agency established a three-step process to address the short- and long-term impacts of the federal tax law, which slashed the corporate income tax rate to 21 percent from 35 percent effective Jan. 1, 2018.

The approval represents the final step, called Calculation C, which quantifies the long-term benefits of the reforms, including deferred income taxes. The order requires Consumers Energy to refund about $1.17 billion for electricity customers and $452 million for customers of its gas business. The company must implement an immediate credit of about $32 million to electricity customers to cover the interim period from the date of the order until new rates are established.

The first step or Credit A was designed to reduce rates on a going-forward basis to reflect the lower federal corporate tax rate. This round resulted in rate reductions of about $113 million for Consumers’ electric customers and $49 million for gas customers.

The second step, the Credit B proceeding, addressed the impacts of the tax law from January 1, 2018, to the date of the order in the utility’s Credit A case. Consumers received approval for a one-time refund of $70 million for electric customers and $31 million for gas customers under the second round.

Consumers Energy is a subsidiary of CMS Energy Corp.