March 2010
www.misec.org

Inside This Issue: UTILITY RATE UPDATES

    • 10% Cap on Electric Choice
    • Electric
    • Natural Gas

Both Consumers and Detroit Edison reach the 10% Cap on
Electric Choice

Both Detroit Edison and Consumers Energy announced that they have reached the 10% cap on customers that can buy their energy from an alternative supplier. Both utilities have a waiting list of customers that want to leave their respective utilities if and when space becomes available.

Now that competition has effectively ended for these two utilities, what incentive do they have to keep electric prices competitive?          

MISEC BOARD

President
Jim Hilgendorf, Superintendent, Johannesburg-Lewiston Schools

Past President
Michael Dewey, Superintendent, Bay-Arenac ISD

Vice President
Robert Brady, Associate Director Business Services, Waterford School District

Mitch Bart, Director of Facilities, Kent ISD

Ken Simon, Facilities Manager, Ingham ISD

Pam Smart, Business Office Supervisor, Van Buren
Public Schools

John Stoner, Director of Facilities, Operations & Transportation, Rochester Community Schools

Secretary/Treasurer
Ray Telman, Executive Director,
MCEA

Ex-officio Member To The Executive Committee
David Martell, Executive Director,
MSBO

 

Consumers Energy: On January 22, 2010, Consumers Energy filed for a new rate increase.  This filing proposes various tariff changes and that Consumers Energy be granted a rate increase of either $178M (5.1%) [if the Michigan Public Service Commission (MPSC) grants the implementation of a new Rate Decoupling Mechanism (RDM), as proposed by Consumers] or $282M (8%) if they do not grant the RDM proposal. If the MPSC does not grant the RDM proposal, it is likely that Consumers will file for an additional $104M increase.

This recent rate requests comes a little more than 2 months after the Commission granted Consumers a $139M (4.3%) increase in November 2009.

Under Michigan's new utility law, Consumers Energy can "automatically" implement this proposed rate as an interim rate increase on or after July 22, 2010 and a  final decision must be issued on or before January 21, 2011 or the proposed rates become approved as filed.

Detroit Edison: On January 11, 2010 the Michigan Public Service Commission granted Detroit Edison a rate increase of $217M (4.8%). This increase was the result of a January 26, 2009 filing requesting an increase of $378 million per year.

Detroit Edison's had a previous rate increase authorized on December 23, 2008 (yes, 33 days prior to the 1/26/09 filing). The new energy legislation passed in 2008 allows a utility to file for rate increases as often as they like. This new law creates an incentive for continuously filing for rate increases. Will we see another filing soon?

Indiana Michigan Power: On January 27, 2010, Indiana Michigan Power filed for its first rate increase in 18 years. I&M is proposing a $68M rate increase. Whereas the dollar amount is not as large as the other utilities, the percent increase is rather large. If approved, I&M is estimating that their rates will increase an average of 30% per rate class. Expect a rather large interim surcharge in this case on or about July 1.

Just like the electric utilities, the natural gas guys are also jumping on the rate increase bandwagon:

Consumers Energy: In May of 2009, Consumers filed for a $114.4 million rate increase (approximately 15% of the distribution charge or ~ 5% overall). While this case is still pending, remember that after 6 months they can file for an interim rate increase and guess what? On November 19, 2009 they did just that. On January 11, 2010 an increase of $217M (4.8%) was approved.  Consumers structured these charges so that they would recover approximately $89 million (which is approximately 78% of what Consumers asked for in the original filing).

Rate GS-1            $0.3386/Mcf
Rate GS-2            $0.2505/Mcf
Rate GS-3            $0.1803/Mcf
Rate ST-1             $0.1376/Mcf
Rate LT-1             $0.0997/Mcf

DTE (MichCon): On June 9th, 2009, DTE filed a request to increase their natural gas rates by $193 million. The MPSC has not yet ruled on this case but surprisingly DTE has self-implemented a rate increase. 
 
GS-1 - $0.8997/Mcf. - This is an increase of approximately 35% of the distribution or delivery rate only.
GS-2 - $0.6946/Mcf. - This is an increase of approximately 35% of the distribution rate only.
ST - $0.4623/Mcf. - This is an increase of approximately 38.5% of the distribution rate only.
LT - $0.2011/Mcf. - This is an increase of approximately 21% of only the distribution rate.

Michigan Gas Utilities: On July 1, 2009, Michigan Gas Utilities (MGU) filed a request with the Michigan Public Service Commission (MPSC) to increase their natural gas rates by $8.5M. On December 16, 2009, the MPSC approved an annual increase of $3.5M, which is approximately 59% less than MGU requested.  The new rates will take effect on January 1, 2010.

MISEC is the largest school energy cooperative in the country and is operated by an independent board that includes superintendents and school business officials elected by its member districts.

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