On March 1, 2024, the Michigan Public Service Commission (“the Commission”) filed its Order in the current Consumers Energy Company (“Consumers” or “the Company”) rate case no. U-21389. The Order closely followed MI-MAUI’s recommendations on several issues of financial or policy concern to local governments.

Overall, the Order represents significant savings for ratepayers in comparison to the Company’s application. Some areas of interest include:

• Revenue Deficiency. The Commission adopted a revenue deficiency of $92 million, which is a 57% reduction from the $216 million the Company originally requested in its application – a total savings to ratepayers of $124 million.
• Return on Equity. The Commission rejected the Company’s requested ROE of 10.25% and instead opted to maintain the current ROE of 9.90%.
• Streetlight Capital Expenditures. The Commission adopted a 20% reduction in streetlight capital expenditures based on the Company’s history of over-projecting and underspending on streetlighting expenses. The Order noted MAUI’s support of this recommended reduction.

The impact to the Company’s proposed streetlighting rates is not as significant as we had hoped. Under the Order, the universal unmetered lighting (UUL) class (which comprises about 95% of the Company’s streetlighting revenue) will see a 24.7% increase, which is a reduction of over 10% from the Company’s proposed 27.5% increase.

The rate hike has two primary components, neither of which we objected to in principal, although we did contest the portion streetlight customers were being asked to pay toward both. The first component is the cost of improving reliability in the electric distribution system, which is allocated among all electric customers. Better reliability is good, and streetlight customers should help to cover justified costs, but we argued (unsuccessfully) that streetlight customers were being asked to pay too high a share. The second major component of the increase was the cost of LED streetlight luminaires.

Although this change brings higher streetlight rates, it is fully offset by savings because you will no longer have to pay up-front to have your lights converted to LEDs, and the conversion process will likely go faster, meaning that customers will transition to the lower LED rates faster.. Also, customers who previously paid fees for LED conversions will see their bill credit rise once again, assuring that they are not footing the bill for the newer no-fee conversion policy.

We achieved a critical accountability victory in this case: the Commission has ordered Consumers to provide streetlight customers with periodic outage reports. We will be working with the Company to implement that aspect of the order. Also, the Commission ordered Consumers to track outages by luminaire type, so we can better judge the costs and benefits of the fleet conversion to LEDs. Our chief complaint in this regard is that reliability has only worsened as LEDs have come into service, but the Company has not been tracking outages in enough detail to know why. We believe better data will help us identify the problems and advocate for practices that will finally improve reliability.