Following three years under an experimental program in which its customers paid frozen rates, MichCon said late Friday that it has filed for new gas commodity rates with the Michigan Public Service Commission (MPSC). The filing proposed a maximum Gas Cost Recovery Rate (GCR), which represents a price cap of $4.54/Mcf.

Based on the proposed maximum GCR, residential customers of MichCon would see a 31% increase in their annual bill. MichCon said there will be no change in the company’s distribution or service charges.

“We realize the increase in rates will result in higher bills for our customers, but even with the increased GCR, MichCon rates will be very competitive with existing gas utility rates in the Midwest,” said Anthony F. Earley Jr., chairman and chief executive of DTE Energy, MichCon’s parent company. “It is important for customers to recognize that MichCon will make no profit on the sale of gas. Under the GCR, what MichCon pays for gas, customers will pay for gas.”

MichCon said that during the past three years in the experimental program its customers have paid frozen rates and have saved approximately $500 million because they were insulated from increasing market prices. During this period, gas prices hit all-time highs as a result of increased demand due largely to growth in gas-fired electric generation and a reduction in natural gas exploration and production activity due to a long period of low prices.

Starting with January bills, MichCon customers will pay gas commodity rates based on market prices and set through the GCR process. The rate calculation is regulated by the MPSC and determined through the same GCR process used prior to the three-year program.

“We also want customers to be aware that we can help them manage high winter bills through various programs such as our budget billing program,” Earley said. He said that customers enrolled in MichCon’s budget billing plan pay an equal amount every month based on the cost of natural gas, past usage and projected temperatures. The company warned that current budget billing customers will see a change in their budget bill amount starting in September to reflect the higher projected prices.

MichCon serves 1.2 million customers with natural gas service in 550 Michigan communities.

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