LANSING, March 27.  The Michigan Public Service Commission
today granted Michigan Gas Utilities authority to increase rates to its natural
gas customers by $1,704,000 annually.  MGU had requested an annual rate
increase of $10,547,752 in its October 31, 1995 application, which was later
reduced to $5,229,000.  The Commission significantly reduced MGU's
requested rate increase due to disallowances for affiliated company
transactions and other operating expenses.  The Commission granted the rate
increase because it determined that MGU's currently authorized rates would
result in a revenue deficiency for MGU in 1997. 

       Today's order rejected MGU's request to increase it monthly
customer service charges for residential customers.  Today's order also
rejected MGU's request, based on the record in this case, to recover from
other rate classes any difference between Guardian Industries' fully allocated
cost of service and the revenue derived from the Guardian/MGU special
contract.  The order does not alter the special contract between Guardian and
MGU.     

     MGU's residential customers using 120 thousand cubic feet (Mcf) of
natural gas per year will see  an annual increase of about $26.16 beginning
with customers' April 1997 natural gas bills.  Individual customer increases
will vary, based on actual customer natural gas use.   The  rates for
commercial and  industrial customers will  decrease, effective with
customers' April 1997 natural gas bills.    The order also reduces rates for
transportation customers and reduces the monthly fixed costs for
transportation customers.  Both of these measures significantly improve
customers' choice and makes MGU's services more competitive with alternatives.
The reductions for commercial, industrial and transportation customers are
attributable to the cost to serve these customers. 

     MPSC staff, MGU, the Association of Businesses Advocating Tariff
Equity, Attorney General Frank Kelley, North Star Steel Company, and 
Alchem Aluminum, Inc. participated in the proceeding.

     MGU, headquartered in Monroe, provides natural gas service to more
than 141,300 customers in the southern and western portion of Michigan's
lower peninsula.

     The Michigan Public Service Commission is an agency within the
Department of Consumer and Industry Services.


Case No. U-10960
(Rate Revision for Michigan Gas Utility)
March 27, 1997