Consumers, MichCon Up Gas Rates

March 19, 2002
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Natural gas customers of Michigan Consolidated Gas Co. and Consumers Energy Co. will see higher monthly bills with the new year following recent action by state regulators.

MichCon, which serves about 287,000 customers in Kent, eastern Ottawa and Muskegon counties, received temporary approval late last month from the Michigan Public Service Commission to raise its natural gas rate from $2.95 per thousand cubic feet (Mcf) to $3.62 per Mcf for January bills, and then to $4.38 per Mcf for the remainder of 2002.

The temporary approval came as the Public Service Commission continues to conduct a comprehensive analysis of a rate plan MichCon filed in August that proposed a $4.54 per Mcf rate to replace the $2.95 per Mcf that was in effect for three years and expired Jan. 1, which means a return to a rate structure based on wholesale market conditions.

The temporary rates, approved Dec. 20, will remain in effect until the commission issues another order.

MichCon’s natural gas rate had been frozen for three years prior to Jan. 1, even as wholesale prices surged last winter in the wake of high demand and low supply. Wholesale prices have since come back down after an increase of supply and lower demand brought on by the recession.

Consumers Energy, meanwhile, received the commission’s approval to add a 6.3-cent per Mcf interim surcharge to customers’ bills beginning in January. The surcharge was allowed as the commission analyzes a request Consumers Energy filed in June to increase its transportation, storage and distribution fees.

Consumers Energy, which presently charges $2.84 per Mcf and expects that rate to fluctuate by up to 38.5 cents per Mcf during the winter heating months when wholesale prices are at their highest, will see an additional $15.3 million in revenue during 2002 from the interim surcharge.

The utility, which has about 7,000 customers in southeastern Kent County and 27,000 in neighboring Montcalm, Ionia and Barry counties, sought the higher service fees to pay for upgrades to its distribution infrastructure and pipeline safety.

Under the fee plan, Consumers Energy’s customer service charge would increase from $6.50 to $8 a month, and the delivery fee would rise from 12 cents to 17 cents per hundred cubic feet of gas. They are the first fee increases in 20 years for Consumers.

Utility spokesman Jeff Holyfield expects the Public Service Commission to act on the proposal by the end of the second quarter. Consumers Energy does not view approval of the interim surcharge as an indication of how the commission may rule.

“We’re not reading anything in the full rate request. There’s still a lot of work to be done,” Holyfield said. “It’s a first step. They could come back with nothing or something.”

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