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PSC Approves Uncollectibles Surcharge for Michigan Consolidated

The Michigan Public Service Commission (MPSC) last week approved a surcharge on Michigan Consolidated Gas Co. bills, beginning on Jan. 1, to recover uncollectibles expenses.

In the utility's April 28, 2005 gas rate case, the MPSC approved the implementation of an uncollectibles expense true-up mechanism (UETM), recognizing the unpredictability of uncollectible expenses actually experienced by the utility. To protect customers, the commission adopted a mechanism that provides an incentive for the utility to keep uncollectibles as low as possible by allowing only 90% recovery.

The annual amount of uncollectibles expense was set at $37.3 million, and the commission also is directing the company to file an annual report on its actual level of uncollectibles in the previous calendar year. To provide the utility with an incentive to minimize its uncollectibles expense, the Commission set the UETM at 90% of the difference between the $37.3 million and the amount of the uncollectibles actually experienced.

The surcharge will be about 55 cents for the average customer.

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