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Michigan Consolidated, SEMCO Agree to Limit Winter Gas Cost Increases

Michigan Attorney General Mike Cox said Friday that he reached a settlement agreement with SEMCO Energy and Michigan Consolidated Gas (MichCon) to cut gas cost increases for 1.5 million natural gas customers by 75%. Cox said he continues to challenge Consumers Energy and Aquila's proposed monthly increases of $42 to $56.60 on customers' winter heating bills.

"The settlement my office reached will significantly reduce families' winter heating bills," said Cox. "Senior citizens and people on a fixed income cannot afford such drastic increases. My office will continue to fight the energy companies to keep utility costs affordable, especially during the holidays."

Cox filed testimony two weeks ago in the gas cost recovery (GCR) cases of Michigan's four major gas utilities, challenging their proposed gas cost increases proposed for this winter and requesting that they be delayed until after the heating season and spread out over a 12 month recovery period rather than four months. "To impose this high monthly rate increase on the working people of this state is appalling and to assess such a dramatic increase during the expensive winter heating season is unacceptable," he said. Several utilities balked at the idea.

Michigan Consolidated spokesman John Austerberry questioned whether extending the recovery period would by "in the best interests of our customers because ultimately they could be faced with even larger bills when the heating season ends. Merely delaying the impact of rising natural gas costs is not necessarily a solution."

However, that's exactly what MichCon ended up doing. On Oct. 27, Cox reached a settlement with SEMCO and MichCon that was approved by the Michigan Public Service Commission at 11:30 a.m. on Friday (Case No. U-14401, U-14402). MichCon sought to increase consumer bills this winter heating season by up to $102.20 and SEMCO sought increases of $76.40. Cox negotiated a substantial decrease to Michigan consumers' monthly heating bills by reducing these increases to only $25.90 for MichCon customers and $33.04 for SEMCO customers.

Cox's settlement with SEMCO and MichCon spreads a portion of the higher commodity costs over five months, with the remaining costs to be collected over 12 months, beginning in April 2006. Customers of these two utilities should expect to see the first increase on their natural gas bill in November 2005.

Scana subsidiary South Carolina Electric & Gas last week agreed to a similar recovery delay for up to $21 million in underrecovered gas commodity costs (see Daily GPI, Oct. 21).

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