Consumers gas rates to hike again: Why you might not notice

Consumers Energy natural gas customers will see a $35 million rate increase this fall, but bill credits will offset the bulk of added costs under a settlement agreement state regulators approved Tuesday.

The Michigan Public Service Commission (MPSC) approved a $35 million increase to Consumers' natural gas rates in Michigan, with the new rates taking effect Oct. 1. But thanks to a sale of Consumers' home energy products program earlier this year, $82.5 million will be credited to the company's natural gas customers over the next three years, resulting in a decrease of $0.27 on the typical residential customer's monthly bill.

Also included in the settlement approved by the MPSC is an increase to the monthly service charge -- when new rates kick in Oct. 1, Consumers will raise its monthly service charge for residential natural gas customers to $15, up from $13.60. The service charge is used to pay for metering, meter reading, billings and other customer-related operating costs, according to the company , and is independent of energy usage or supply.

In April, Consumers sold a home appliance repair service, Appliance Service Plan, to Illinois-based Oncourse Home Solutions. The sale resulted in an upfront gain of about $110 million, according to the MPSC, and $82.5 million from the sale is being used to generate the bill credits. The remaining $27.5 million is being used to offset Consumers' approved revenue deficiency, according to regulators.

A company spokesperson said the revenue generated by the rate increase will go toward infrastructure upgrades of Consumers' natural gas system.

"We appreciate the Michigan Public Service Commission’s decision today to approve our natural gas case settlement," company officials said in a statement. "Consumers Energy is committed to modernizing our natural gas system, making it even more safe, clean, reliable and affordable for our 1.8 million customers. This settlement allows us to make needed investments while keeping bills as low as possible, including providing customers with additional benefits from the sale of our Appliance Service Plan."

Initially, Consumers had asked the MPSC to increase natural gas rates by $136 million. Michigan Attorney General Dana Nessel, whose office intervened in the case to seek a lower rate increase, applauded the reduced figure approved by the MPSC.

"Today's decision by the Commission to approve the settlement reducing Consumers Energy's proposed increase ensures money stays in the pockets of their customers instead of needlessly increasing the company’s bottom line," Nessel said in a statement.

In regulatory briefings, the Attorney General's office argued Consumers should only raise natural gas rates by $5.3 million.

Consumers most recently increased its natural gas rates last October, after the MPSC signed off on a $95 million increase.

The MPSC is the body that considers rate increase requests from utility companies . In rate increase request cases, the commission typically ends up approving a lower rate increase than what's initially sought by a utility.

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— Contact Arpan Lobo: alobo@freepress.com

This article originally appeared on Detroit Free Press: Consumers gas rates to hike again: Why you might not notice