MI Reaches Major Gas Settlement with Consumers Energy

Michigan Attorney General Jennifer M. Granholm announced last week that her office reached a major settlement with Consumers Energy Co. (CECo) that is expected to save the company's natural gas customers $190 million over the next nine months.

Under the settlement, CECo's gas rates will be frozen at $4.68/Mcf between June 2001 through March 2002. The company, whose gas rates have been frozen at $2.84/Mcf since 1998, had asked the Michigan Public Service Commission (MPSC) for the go-ahead to charge $5.68/Mcf for its gas.

This agreement "will take some of the sticker shock out of the price consumers will be paying for natural gas [next] winter," said Granholm. "It not only lowers the actual prices that Consumers Energy will be able to charge its customers this winter, but [it] also gives customers more accurate pricing information to use in deciding whether to choose an alternate supplier for their natural gas."

The settlement, which still must be approved by the MPSC, was negotiated by Granholm, the MPSC staff, the residential ratepayers consortium and the Association of Businesses Advocating Tariff Equity (ABATE).

Granholm said Consumers Energy also had agreed to make changes in its gas purchasing strategy, saving customers another $85 million. She expects the company to lock in these newly negotiated current prices for approximately 100 Bcf of gas to be purchased during the next nine months. The bulk of the purchased gas will then be re-sold to Consumers Energy's retail customers.

Consumers Energy also had asked the MPSC to increase its rates for the distribution of natural gas, which are calculated separately from the commodity cost. Granholm said she expects to oppose the requested rate hike, which would not go into effect until 2002.

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