State regulators OK rate increase for Consumers Energy

Consumers Energy has received permission from state regulators to increase its prices for delivering natural gas to households and businesses.

The Michigan Public Service Commission announced Sept. 30 that it approved a rate increase, set to begin beginning Nov. 1, that will mean an additional $157,495,000 for the company.

The typical residential customer will face a price increase of $6.44 per month, or 8.1%, according to a press release from the state.

A spokesperson for Consumers Energy told Michigan Capitol Confidential that the company buys most of its gas during the summer. Storing it, he said, helps keep prices lower. This practice, Brian Wheeler told CapCon in an email, helped the company save $120 million on natural gas purchases last winter.

The company provides 1.8 million customers with electricity and 1.7 million with natural gas, according to its website. It operates as a regulated regional monopoly for electricity but faces a competitive market for delivering natural gas.

In March the company received a rate increase of $153,809,000 for its electricity business, marking the sixth increase in as many years, as reported by CapCon.

Consumers Energy faces two distinct operating environments, Josh Antonini, research analyst for energy and environmental policy at the Mackinac Center for Public Policy, told CapCon.

"When it comes to rate increases in the electricity market, Consumers Energy has a monopoly and an incentive to push rates ever higher, as the more they spend, the more they get from ratepayers — and fear no competition,” said Antonini.

But in the natural gas market, Antonini said, Consumers faces competition, and people who receive its service aren’t just ratepayers, but customers. Customers, he said, can choose from various alternative gas suppliers whose rates are unregulated and competitive.

“As a result, the rate increase Consumers is asking for is not of the same sort as electricity rate increases,” said Antonini.

The state of Michigan has a website that explains customer choice. Anyone who is intereted in comparing prices on natural gas service can consult the website GasChoice, which is operated by the state.

Other natural gas companies in Michigan do not have their rates set by the Michigan Public Service Commission, according to Antonini.

Members of the commission members are appointed by the governor.