Consumers Energy settles on reductions to proposed rate hike and service fee increase

Susan J. Demas

Attorney General Dana Nessel has announced a settlement with Consumers Energy over the company’s proposed $136 million natural gas rate increase, with the Michigan Public Service Commission approving a 75% reduction to the initially requested increase.

Through the settlement, Consumers Energy will receive a $35 million increase in revenue. Natural gas customers will also receive a bill credit over the next three years due to the sale of the company’s home service plan program.

“Michigan consumers deserve reliable utility services at fair prices,” Nessel said in a statement last week. “That’s why my department scrutinizes every proposed rate hike by utilities.”

“[The] 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. We will continue to advocate for affordable and dependable service for residents across our state,” Nessel said.

In addition to its proposed rate increase, Consumers Energy also proposed increases to its monthly service charges for residential and small commercial customers, which would have increased the charge to $18.60 for residential customers and $19 for small commercial customers. Under the approved settlement, the residential service charge will increase to $15 a month while the charge for small commercial customers will increase to $18 monthly.

While Consumers Energy initially proposed splitting the proceeds from selling its home services product business with customers 50-50, the attorney general argued 100% of the proceeds should be returned to customers, as 100% of the net revenue from the program had previously gone to the benefit of ratepayers.

Under the settlement, 75% of the sale’s proceeds will be returned to ratepayers in the form of bill credits paid out over three years beginning in October, with Consumers Energy retaining the other 25% to supplement any revenue needs it has as the rate increase is implemented.

Additionally, 100% of the ongoing proceeds from the home service program will be credited to ratepayers, per a long-term service agreement that Consumers entered with the buyer.

Overall, the settlement results in an average rate increase of 1.5% for residential ratepayers before the bill credit is applied. With the bill credit, the increase will be .1% for the next fiscal year beginning in October 2024.

“We appreciate the Michigan Public Service Commission’s decision to approve our natural gas case settlement. 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,” Consumers Energy spokesperson Brian Wheeler said in an emailed statement.

“This settlement allows us to make needed investments while keeping bills as low as possible, including providing customers with additional benefits through lower rates from the sale of our Appliance Service Plan,” Wheeler said.

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