The Michigan Public Service Commission brought state energy consumers welcome news about winter natural gas supplies. With state gas demand expected to decline 1% this winter to 873 Bcf, and national and state (544 Bcf) gas storage levels near full, Michigan gas supplies should be more than adequate this winter, despite sharply lower in-state production levels. However, utility rates are still relatively high, compared to current wholesale price levels, the PSC said in its Michigan Energy Appraisal.

While high storage levels and a weakening economy has pushed wholesale prices down into the $2.40s on the New York Mercantile Exchange, regulated supply rates in Michigan are significantly higher, and there is a wide disparity among the utilities. Rates have been set at $4.69 for Consumers Energy customers. Consumers charged customers $3.74/Mcf this month to reflect in part the reduction in wholesale costs. However, on June 29, Consumers filed to raise its rates by $140 million. A commission decision is due next summer. MichCon’s charges are frozen at $2.95/Mcf through the end of the year, but the utility has filed to reinstall its gas cost recovery mechanism in January at a rate of $4.54. Semco’s rates are frozen through next march at 3.24/Mcf.

Meanwhile, state gas production is down 7% to 226.8 Bcf in 2001 after a 7% decline last year. Slow growth in production of Antrim Shale gas and reductions in Niagaran Reef production continue to be a major factor in the declines. Net interstate gas deliveries are projected to increase to 695.9 Bcf in 2001, compared to only 560.2 Bcf in 2000, highlighting the significant increased reliance on out-of-state gas supplies.

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