Regulators let Consumers Energy raise electric bills, but order that residents be protected

LANSING, MICH. — State regulators are letting Michigan's second-largest utility raise residential electric bills later this week, but not as much as Consumers Energy wanted.

The Michigan Public Service Commission estimates the average Consumers Energy household will see a $2.99 increase on its monthly bill for six months, a bump of 3.5 percent. The Jackson-based utility originally sought to add about $10 to monthly residential bills, a double-digit percentage increase.

Regulators on Tuesday ordered Consumers Energy to partially offset the residential rate increase it plans to implement Thursday with proceeds from the 2007 sale and decommissioning of a nuclear plant.

"The result minimizes the effect on residential customers, which could have been as high as a 16 percent increase," said Public Service Commission Chairman Orjiakor Isiogu.

A new state law lets utilities automatically increase power bills on their own if regulators do not act within six months of a rate case being filed. Refunds with interest must be paid to customers if the commission later decides a utility has charged too much.

Consumers Energy, which has 1.8 million customers, was reviewing Tuesday's order to see what effect it will have on business customers. To meet requirements under the new state law, the utility was told to continue phasing in "cost of service" power rates.

That means business rates will go down or be held in check while residential rates will go up. Prices historically have been skewed so residents pay less than the actual cost of electricity, while businesses pay more.

Consumers Energy spokesman Jeff Holyfield said the order will help the utility, a subsidiary of CMS Energy Corp., make investments and add jobs.

Residents and others opposed the company's proposed double-digit increase on residential bills at a time people are losing jobs and having more trouble paying bills. More recently, Consumers Energy filed papers requesting an interim $4 a month residential hike while waiting for regulators to rule on the $10 rate increase. The commission likely will issue a final order by mid-November.

"We're glad the Public Service Commission is sensitive to the economic troubles facing many of Consumers' residential customers," said Sharon Parks, president and CEO of the Michigan League for Human Services, an advocacy group for the poor.

Consumers Energy says higher rates are needed so the utility can upgrade power lines and equipment, reduce emissions, install software for improved billing and customer service, and develop metering technology to pinpoint power outages.

Last June, regulators authorized Consumers to raise the average residential bill $2.64 a month. Detroit Edison, the state's largest utility, could raise electric rates in July depending on what regulators decide.

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On the Net:

Consumers Energy: http://www.consumersenergy.com

Michigan Public Service Commission: http://www.michigan.gov/mpsc