Thousands of Michiganders are set to see a rate increase on their natural gas bills—but those rates would’ve likely been set far higher, had Attorney General Dana Nessel not gotten involved.
MICHIGAN—Thousands of Michiganders are set to pay a few dollars more on their monthly natural gas bills under two settlement agreements reached this week between the Michigan Public Service Commission and Consumers Energy and the Michigan Gas Utilities Corporation.
About 1.8 million Consumers Energy customers in Michigan will see an average increase of $4.20 on their monthly natural gas bills beginning in October, according to state officials. And for another 183,000 Michiganders in the western and southern Lower Peninsula, average monthly gas bills from the Michigan Gas Utilities Corporation will climb by about $5.10 in January.
That’s a monthly rate increase of 4.2% and 6.6%, respectively.
But those utility bills could have likely been higher had Michigan Attorney General Dana Nessel not taken legal action to oppose much larger rate increases that were initially proposed by the two utility companies. Conservative estimates from Nessel’s office show the two settlements reached this week will effectively save Michigan customers $126.2 million.
“My office takes very seriously its commitment to defend Michigan consumers, and often that means defending utility customers from exorbitant and constant rate hike requests before the state,” Nessel said in a statement on Thursday. “We are defending the pocketbooks and household ledgers of consumers throughout the year from our largest energy providers.”
In addition to saving millions of dollars for ratepayers, the settlements announced this week effectively slashed the companies’ proposed rate hike demands in half, as well as completely blocked a $2 service fee that would’ve otherwise landed on Consumers Energy bills.
Here’s the Deal:
This year, Consumers Energy initially tried to hike its natural gas rates for all customers by 7.8%—which would’ve increased its annual revenues by about $212 million to help offset the cost of repairs and other upgrades to the company’s electrical infrastructure in Michigan.
Nessel argued that Consumers should only increase its revenues by about $53 million, and flatly opposed the company’s plan to tack on an extra $2 monthly service fee for customers. After Nessel and others provided testimony, Consumers cut a deal with the state’s Public Service Commission to reduce the increase to $175 million and nix the monthly fees altogether.
Nessel’s office estimates the deal saved customers about $117 million, while simultaneously providing enough revenue for the company to perform necessary repairs and upgrades.
The Commission’s settlement with the Michigan Gas Utilities Corporation also led to a significant rate reduction—from $19.1 million to $9.9 million. As a result, the average natural gas bill for its customers will only climb by about 6.6% (about $5 a month) instead of 11.76%.
State officials estimate the deal will save customers about $9.2 million annually—bringing the total savings for Michigan consumers to more than $2.4 billion since Nessel took office in 2019.
“Similar to the large rate cases impacting millions of Michigan consumers, my office aggressively fights for, and wins, reduced energy costs for all utility customers across this state,” Nessel said in a statement announcing the Michigan Gas Utilities Corporation settlement.
The proposed rate increases were also opposed by the Retail Energy Supply Association; Michigan State University; the Residential Customer Group; the Citizens Utility Board of Michigan; the Association of Businesses Advocating Tariff Equity; Energy Michigan Inc.; and the Lansing Board of Water and Light.
Up Next: Electric Bills
Nessel also filed testimony with the Public Service Commission this week to oppose a proposal from Consumers Energy, which would hike average residential electricity rates by about 3.3%.
Instead, Nessel argued that monthly electric bills should only be allowed to increase by 1%. The Public Service Commission will meet to discuss the issue next month, and a final order—expected by February—will likely include a settlement somewhere in the middle.
“I will continue to advocate for the pocketbooks of Michigan utility customers and ensure their interests are represented in the unending cycle of rate increase requests,” Nessel said in a statement. “Scrutiny by my office and experts finds our utility companies request rate hikes well beyond their needs. We advocate in these cases to slash requested rate hikes and to focus utility revenues into consumer priorities targeting outage reduction and electrical reliability.”
Federal statistics show that the average monthly electric bill for residential customers in the United States increased 13% from 2021 to 2022, rising from $121 a month to $137 a month. Wholesale electricity prices have also reportedly climbed across much of the US and were, at times, volatile as a result of extreme weather events and the limited availability of coal.
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