Lansing, MI - The Michigan Public Service Commission has approved an approximately $273.3 million rate increase for DTE Electric Co., but denied the company’s request to assess a system access charge for customers who have installed renewable energy projects.
The Commission also approved an electric vehicle pilot program.
The approved increase is nearly $203.3 million less than the $476.6 million total DTE had requested in July 6, 2018 (Case No. U-20162). In that fling, DTE proposed a $328.4 million rate increase and ending a $148.2 million rate reduction from the federal Tax Cuts and Jobs Act.
MPSC Chairman Sally Talberg said the approved funding will allow DTE to continue investing in electrical system upgrades with the goal of improving safety and reliability and meeting its customers’ expectations.
Residential customers who use an average of 500 kilowatt hours of electricity a month will see bills increase by $6.19, or 8.69 percent. Commercial customers will see a 4.34 percent increase and industrial customers a 2.5 percent increase. The new rates are effective May 9.
Included within the new rates was MPSC authorization for DTE to spend a total of $283 million on tree trimming through 2021. DTE is approved to spend $95.1 million this year on its Enhanced Tree Trimming Program, and nearly $188 million through 2021 for the first three years of a seven-year “surge” trimming program. The MPSC ordered DTE to submit an annual tree trimming report, including an update on efforts in Detroit. The first report is due March 1, 2020. It must also file a report in 2022 on the surge trimming program.
DTE also was approved to make capital investments in its distribution system to increase resiliency and limit power interruptions. It will spend $84.3 million on an advanced distribution management system for reliable grid operation, $111 million for modernizing two system operating centers, and a system hardening and upgrade program in Detroit while also removing old arc wire in the city.
The Commission rejected DTE’s proposed formula for determining how to pay for electricity some customers generate through renewable sources and supply to the grid. DTE had suggested a distributed generation credit based on the monthly average real-time locational marginal price for energy. The MPSC ruled that the proper customer compensation is the cost of the power supply component of retail rates minus the cost of transmission. The Commission also rejected DTE’s proposed distributed generation system access contribution charge, finding that it is not based on a customer’s usage of the distribution system and it is not equitable.
The new distributed generation program will apply to all new installations of eligible customer-sited renewable energy in place of net metering, which was phased out by Public Acts 341 and 342 of 2016. Existing net metering customers and those who file completed applications before changes go into effect May 9 will be grandfathered in under the existing net metering program for 10 years from the date of their initial enrollment. Customers who move out of a residence that is in the net metering program will receive a refund of unused credits, and those who end participation in the program but stay in the residence will have their accumulated credits applied to the power supply components of their bills.
In a related ruling today in Case No. U-18383, the MPSC denied a rehearing request by Consumers Energy Co. over the new pricing methodology for the distributed generation program addressed by the Commission in an April 2018 order pursuant to the 2016 energy laws.
(For an Issue Brief on DTE distributed generation, click here.)
DTE will be allowed to invest $13 million in a three-year electric vehicle and school bus charging pilot program, called Charging Forward. The program is to include information campaigns for residential and commercial customers, rebates for residential customers who meet program criteria, and up to $20,000 rebates for electric charger site hosts.
The objectives of the pilots are to maximize program participation at the lowest cost, test novel practices and technologies to ensure new electrical load from EV charging maximizes the net benefits to all ratepayers, and ensure that investments in make-ready infrastructure address barriers such as range anxiety and enable DTE to learn how to manage charging times and locations, minimize investment in distribution infrastructure, and eliminate adverse grid impacts.
(For an Issue Brief on utility EV charging pilot programs, click here.)
DTE Electric Co. Case No. U-20162 Fact Sheet
- Revenue increase granted: $273,334,000.
- Return on common equity (ROE): 10 percent
- Capital mix: 50 percent equity to 50 percent debt
- Overall rate of return: 5.48 percent
- Rate base: $17,058,834,000
- The monthly customer service charge will remain the same at $7.50 for residential customers and $11.25 for commercial customers. The primary voltage customer charge will be set at $53.52 a month.
- A 34-megawatt combined heat and power plant for Ford Motor Co.’s Research and Engineering Center was approved. The power plant is expected to supply steam to the center, and electricity to Ford and other DTE customers.
- Larger commercial and industrial customers will no longer have the option to pay their bill using a credit card. The option will still be available for residential and smaller commercial customers.
- A non-wires alternative pilot for research and analysis of battery storage, interconnection, and management options was approved.
- Fixed Bill and Weekend Flex pilot programs were rejected. However, a summer on-peak rate program was affirmed, allowing for different rates from 4-9 p.m. on weekdays from June through September under a phased-in schedule using pilots to test rate options and customer response. DTE is also to explore a shadow billing option, which would allow a customer to see how much they would pay under different rate structures.
Rates approved today are a 6.16 percent increase over rates that were approved in July 2018 in Case No. U-20105 to account for the Credit A impact of the federal tax law change.
DISCLAIMER: This document was prepared to aid the public’s understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission’s orders. The Commission’s orders are the official action of the Commission.