Consumers Energy and MGU have both received approval from the Michigan Public Service Commission to increase natural gas rates for distribution services.  Meanwhile, DTE filed for a temporary delay of its own application for a rate increase.

Why are utility gas distribution rates going up?  The utilities have cited reasons including increasing costs related to infrastructure, operations, and financing.

Utility distribution rate hikes can potentially affect all gas customers on their system, whether or not they’re on a supply program.  This is not the same as utility supply prices, which could also increase this winter, based on forward market pricing.

What does this mean for your business?

Your distribution rates are going up soon.  How much?  That depends on your natural gas usage patterns and utility distribution rate class.  Most customers will see an increase in monthly charges, volumetric charges, or both.  Some will see an increase in one area that’s partially offset by a decrease in the other.

Ultimately, the exact percentages of the increases to natural gas rates will vary by customer.  The utilities filed projections of the increase to their revenue by rate class.  This provides a general idea of the impact:

• Consumers estimates an increase in their total revenue of 3.6% across Residential and General Service rate categories, and 11.4% for Transportation Gas.
  • Effective October 1, 2023, this $95 million increase fell short of the $212 million Consumers was seeking.  This follows the $170 million rate increase approved last July.

• MGU expects revenue increases in the following approximate ranges.  Residential and General Service customers: less than 1% to nearly 5%.  Transportation Gas: more than 10%.  Gas Choice: 8 to more than 13%.
  • Effective January 1, 2024, this $9.9 million increase is less than half of the $19.1 million increase MGU was seeking.  Their prior increase of $9.25 million was approved in September 2021.

• DTE has filed to delay its rate increase application until at least November 1, 2023.  Stay tuned.

 

The Bottom Line

If your business is on one of these utility natural gas systems, you may want to consider the upcoming utility distribution rate increase when planning your budget.  Furthermore, if your accounts aren’t on the optimal utility distribution rate structure to begin with, the increase could hit you even worse.

Although utility distribution rate increases aren’t avoidable to customers on their system, we might be able to mitigate the impact to your business.  With our Utility Bill Optimization service, we can analyze your usage data, utility distribution rates, and billing accuracy, and potentially implement savings opportunities.

There also are ways for some high-usage customers to reduce their distribution charges through supply programs like Transportation Gas.

Savings opportunities can be more common than one might think, especially given the ways so many businesses have changed in recent years.

Are you paying more than you need to?  Let’s find out.  Contact us and send us your utility bills.  We can scour your utility bills for savings opportunities and advise you on the merits of pursuing them.

 

 

Please note: For many customers, we’re doing this analysis already when we have access to their gas utility bills and data.  Consumers provides suppliers with copies of their Transportation Gas customers’ monthly bills, for example.  Not every utility sends that information frequently, however, whether for Transportation Gas or Gas Choice customers.  Often, the quickest way for us to access utility bills is for customers to forward them.

The filings are available on the MPSC website: Consumers (Case U-21308), MGU (Case U-21366), and DTE (Case U-21291).