Summary
CMS Energy Corporation (CMS) subsidiary, Consumers Energy, received approval from the Michigan Public Service Commission (MPSC) for significant rate increases in both its natural gas and electric businesses. The MPSC approved an annual increase of approximately $16 million for natural gas rates, effective June 8, 2012. Separately, the MPSC authorized an increase of $118,475,000 in annual retail electric rates, also effective June 8, 2012. These approvals are crucial for CMS Energy as they provide a substantial boost to revenue and impact the company's financial performance. The settlement agreements and orders include various provisions regarding rate structures, program funding (such as the Main Replacement Program for gas), and accounting treatments for capital expenditures, particularly for smart grid initiatives. Investors should note the approved rate of return on common equity of 10.3% for both gas and electric segments, which will impact profitability.
Key Highlights
- 1Consumers Energy received MPSC approval for an annual increase of approximately $16 million in natural gas rates.
- 2Consumers Energy was authorized by the MPSC to increase its retail electric rates by $118,475,000 annually.
- 3Both the gas and electric rate increases are effective for service rendered on and after June 8, 2012.
- 4A settlement agreement for the gas rate case includes provisions for Consumers Energy to fund a $56 million annual Main Replacement Program.
- 5The electric rate increase was approved based on a projected October 2011-September 2012 test year.
- 6The MPSC approved a 10.3% rate of return on common equity for both the gas and electric rate cases.
- 7The company previously self-implemented a retail electric rate increase of $118 million in December 2011, and a reconciliation report is required.