Summary
CMS Energy Corporation (CMS) and its subsidiary Consumers Energy Company have filed an 8-K report detailing a significant decision by the Michigan Public Service Commission (MPSC) regarding electric rates. The MPSC's Electric Order authorizes an increase in annual retail electric revenues for Consumers Energy, totaling approximately $130 million starting December 1, 2015. This order also includes an additional $35 million in annual revenue upon the acquisition of the Jackson Power Plant, with a net adjustment on April 15, 2016, resulting in an overall annual increase of approximately $126 million compared to current rates. Notably, the Electric Order addresses a prior self-implemented rate increase of $110 million in June 2015, requiring Consumers Energy to reconcile collected revenues with the final approved rates. While the order approves a 10.3% rate of return on common equity based on a 2015-2016 test year, it denies certain mechanisms sought by Consumers Energy, such as an Investment Recovery Mechanism and a Revenue Adjustment Mechanism. The continued implementation of an advanced-metering opt-out tariff was approved.
Key Highlights
- 1MPSC authorizes Consumers Energy to increase annual retail electric revenues by approximately $130 million, effective December 1, 2015.
- 2An additional $35 million in annual revenue is authorized upon acquisition of the Jackson Power Plant.
- 3The net effect on April 15, 2016, will be an approximate $126 million annual increase in retail electric rates compared to current levels.
- 4Consumers Energy must reconcile revenues collected during its prior self-implemented rate increase (effective June 2015) with the final approved rates.
- 5The MPSC set a projected rate of return on common equity at 10.3% for the 2015-2016 test year.
- 6Requests for an Investment Recovery Mechanism and a Revenue Adjustment Mechanism were denied by the MPSC.
- 7Approval was granted for the continued implementation of an advanced-metering opt-out tariff.