MPSC approves $92M rate increase for Consumers Energy electric customers

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The Michigan Public Service Commission today approved a more than $92 million increase in rates for electric customers of Consumers Energy Co., including significant emphasis on investments needed to improve reliability (Case No. U-21389).

The $92,009,000 increase is 57.4% lower than the $216 million rate increase the utility sought in its initial application. Consumers later reduced the request to $170.8 million.

A typical residential customer using 500 kilowatt hours per month will see an increase of $1.53, or 1.61%, on their monthly bill.

The company said it sought the increase to cover investments in generation and distribution assets, safety and legal compliance and enhanced technology as well as increased operations and maintenance expenses and increased financing costs.

The company had requested a return on common equity of 10.25% with an overall rate of return on total rate base of 6.11%, and a 51.50% common equity ratio. Today's order authorizes a rate of return on common equity of 9.9% and an overall rate of return of 5.85% on a jurisdictional rate base of $13,669,075,000.

Today's order partially approved an investment recovery mechanism proposed by the Company in its efforts to improve the reliability and resilience of its electric distribution system. The Commission directed Consumers to share its distribution investment plans with the Commission and other interested persons as soon as reasonably possible after the date of this order and, for year two, by November 1, 2024. The order also includes approval for the first year of costs related to a pilot program to relocate overhead distribution ground underground to better understand how undergrounding compares to other approaches to improving reliability.

The Commission also directed Consumers to file detailed information that connects performance in operational metrics to proposed incentive compensation in its next general electric rate case, as individual operational metrics will be scrutinized more critically going forward.

The Commission directed Consumers to conduct a formal optimization analysis of line clearing cycles that factors in customer costs of outages, the costs of service restoration, and the costs of line clearing, including an impact evaluation of more frequent line clearing cycles. The analysis should include issues involving higher contractor costs, added vegetation data, and corresponding reliability concerns regarding the company's proposed nine-year clearing cycle for 4.8kV circuits. The analysis must be filed by Sept. 3, 2024, in Case No. U-20697.

The order directs Consumers to file a transportation electrification plan in Case No. U-21538 by July 1, 2024, outlining updates of its projections and actual costs of electric vehicle adoption and resulting impacts to its plan. The company must hold at least two public meetings with interested persons regarding the plan. In addition, the Commission directed Consumers to study penetration levels for direct current fast charging (DCFC) electric vehicle (EV) chargers and conduct a load shaping study for DCFC EV chargers as well as Level 2 chargers and evaluate whether it is appropriate for these chargers to have separate tariffs. Consumers must include the results of this evaluation in its next general electric rate case.

The Commission also directed Consumers to implement a number of equity recommendations, including, among other measures:

• Providing environmental justice- and equity-related information, such as reliability metrics and investments, in future rate cases and other upcoming proceedings.
• Developing a way for interested persons to request, safely obtain and use geographic information system data with input of MPSC Staff.
• Providing a regression analysis in support of reliability investments in the company's distribution system in future filings.
• Filing more extensive information in future company reports about human contacts with electric lines.
• Working with the Commission, MPSC Staff, other utilities and interested persons to begin identifying effective, reasonable and prudent pathways for energy security to prevent heat-related illnesses and deaths in Michigan.
• Proposing a pilot program in which the utility works with a third-party to provide a resource for medically vulnerable residential customers meeting low-income requirements to help coordinate and maximize the use of utility, city, state, and federal incentives for the installation of household energy waste reduction, solar, and energy storage.
• Filing a full summary of environmental justice and equity considerations in its next rate case, including a detailed discussion of how proposed environmental changes will both impact customer rates and be implemented on such rates.
• Engaging interested and affected customers and communities in meetings in future distribution plans so the customer and community needs and concerns can be considered when designing and selecting distribution system programs, projects, and sites.

Intervenors in the case were Michigan Department of Attorney General; Association of Businesses Advocating Tariff Equity; Energy Michigan Inc.; The Kroger Co.; Michigan Environmental Council; Natural Resources Defense Council; Sierra Club; Citizens Utility Board of Michigan; Residential Customer Group; Great Lakes Renewable Energy Association; Michigan Cable Telecommunications Association; Hemlock Semiconductor Operations LLC; Michigan Energy Innovation Business Council; Institute for Energy Innovation; Advanced Energy United; Environmental Law and Policy Center; Ecology Center; Union of Concerned Scientists; Vote Solar; ChargePoint Inc.; Michigan Municipal Association for Utility Issues; Foundry Association of Michigan; Michigan Electric Transmission Company; Urban Core Collective, and Walmart Inc. MPSC Staff also participated.

Consumers' last electric rate increase of $155 million was approved in January 2023 as part of a settlement agreement.

For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the Commission on Facebook, Twitter or LinkedIn.

To look up cases from today's meeting, access the MPSC's E-Dockets filing system.

Watch recordings of the MPSC's meetings on the MPSC's YouTube channel.

For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the Commission on Facebook, X/Twitter or LinkedIn.

DISCLAIMER: This document was prepared to aid the public's understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission's orders. The Commission's orders are the official action of the Commission.

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