State regulators approve nearly $140 million rate hike for Consumers Energy natural gas customers

The distribution:

• State regulators approved an annual natural gas rate increase of $139.2 million for Consumers Energy, down from the utility’s initial request of $240 million.

• Starting November 1, Consumers Energy customers will see a 4.3% rate increase on their natural gas bills, amounting to approximately $4 per month.

• Michigan Attorney General Dana Nessel weighed in on the case, urging the commission responsible for approving the rate hike to “cut demand by more than half.”

Consumers Energy customers in Michigan will pay more on their utility bills starting next month after state regulators approved a 4.3% rate increase Thursday.

Under the new rate – which takes effect November 1 – households will pay an average of $4 more for natural gas each month, according to the Michigan Public Service Commission (MPSC).

The latest rate hike will allow the utility to collect an additional $139.2 million annually from its 1.8 million natural gas customers across the state, a 42% reduction from the $240 million Consumers Energy initially requested. The MPSC also approved a return on equity of 9.8%, the utility’s profit margin on capital investments.

The utility says the increase is necessary to support investments in the safety and reliability of its natural gas system, as well as to support projects to replace aging gas mains and service lines.

However, the Michigan attorney general’s office said it found “several instances” in Consumers Energy’s rate hike request where the company “inflated its capital expenditure projections and included unreasonable profit margins for itself.”

Related->>Michigan lawmakers are working to rein in energy rates and hold utility companies accountable.

Michigan Attorney General Dana Nessel said in a news release Thursday that she urged state regulators to cut consumers’ initial rate hike request by more than half, arguing that the company should not be allowed to request a rate hike greater than 3.5% because of the burden it places on families already facing rising energy costs.

“Utility customers across the state, whether they pay their bill to Consumers Energy or DTE, ask all the time when their energy bills will stop increasing, and it’s clear the answer is never,” Nessel said. “For nearly eight years, my office has worked diligently to curb these utility rate hikes, and in turn, the cases have only grown. Changes need to be made to our current system of annual on-demand rate hikes and our regulatory structure, but the only changes we have seen are higher rates and bigger bills.”

Nessel claims that recent rate hike requests from DTE and Consumers Energy included “inappropriate” expenses such as “private jet travel for staff, millions of dollars in executive incentive compensation tied to maximizing shareholder returns, and other unsupported expenses that could not be demonstrated to be reasonable or prudent.”

The MPSC says it did not approve costs that could not be “sufficiently justified,” noting that it did not approve Consumers’ $7.9 million request for transportation pipeline integrity work, citing “a tendency to overestimate costs and underspend on this program.”

State regulators have approved nearly $800 million in rate increases for Consumers Energy since 2020, according to Nessel’s office. Other rate hike cases currently open before the MPSC include DTE’s Electric Rate Hike Request and Upper Peninsula Power Company’s Electric Rate Hike Request.