Summary
CMS Energy Corporation (CMS) announced on January 13, 2015, that its subsidiary, Consumers Energy Company, reached a settlement agreement in its gas rate case, which was subsequently approved by the Michigan Public Service Commission (MPSC). This settlement allows for an approximate $45 million annual increase in natural gas rates, effective January 14, 2015. The approval resolves various issues, including setting a 10.3% rate of return on common equity for the company.
Key Highlights
- 1Consumers Energy secured a $45 million annual increase in natural gas rates through an MPSC-approved settlement.
- 2The approved rates will become effective for service rendered on and after January 14, 2015.
- 3The settlement includes a 10.3% rate of return on common equity.
- 4New provisions include a residential Customer Charge and an Income Assistance Credit for qualifying Principal Residence Customers ($11.50/month).
- 5Consumers Energy will fund an Enhanced Infrastructure Replacement Program.
- 6A gas revenue decoupling mechanism will be implemented to reconcile weather-normalized actual revenue with approved revenue.
- 7The requested Investment Recovery Mechanism was not approved as part of the settlement.
Frequently Asked Questions
The primary impact is an approximate $45 million annual increase in natural gas rates, effective January 14, 2015, which is expected to improve the company's revenue and profitability.
A new residential Customer Charge will be implemented. Additionally, qualifying Principal Residence Customers will receive an Income Assistance Credit of $11.50 per month.
The decoupling mechanism is designed to reduce the direct link between the volume of natural gas sold and the company's revenue. It allows Consumers Energy to reconcile weather-normalized actual revenue with the revenue approved in the rate case.
No, while the settlement granted an increase in rates and introduced new mechanisms, the requested Investment Recovery Mechanism was not approved.