|John G. Strand, Chairman || Dorothy Wideman|
|David A. Svanda || Mary Jo Kunkle|
|Robert B. Nelson|| 517.241.6160|
LANSING, November 2. The Michigan Public Service Commission today
authorized The Detroit Edison Company to proceed with the sale of
securitization bonds, granting the company authority to securitize up to
$1,774,202,000 of its after tax regulatory assets under provisions of the
Customer Choice and Electricity Reliability Act of 2000. Today's order also
grants Detroit Edison authority to impose and collect from its customers
securitization charges and tax charges to provide for full and timely recovery
of the amount securitized, as well as federal, state, and local taxes related to
securitization and qualifying costs. The Commission granted the company
authority to collect an initial securitization charge of not more than $0.004239
per kilowatt-hour and an initial tax charge of not more than $0.000766 per
kilowatt-hour on customers' monthly electric bills. The securitization charge
and the tax charge will become effective with the first billing cycle after the
sale of the securitization bonds for a period of not greater than 15 years and
are subject to true-ups. The securitization charge and the tax charge will be
fully offset by equivalent reductions in current charges on customers' electric
bills. No customer will see a rate increase as a result of this order.
Under securitization, Detroit Edison will be allowed to refinance some of its
most expensive debt and equity with less expensive debt and equity. Savings
occurring as a result of securitization will be passed through to the company's
electric customers. The Commission directed Detroit Edison to first use the
cost savings to cover the 5% residential rate reduction begun in June 2000,
resulting from passage of the Customer Choice and Electricity Reliability Act.
The cost savings will then be used to reduce all other customers' rates by 5%.
Any remaining excess savings will be designated for use in funding the low-
income and energy efficiency fund (approximately $50 million per year).
Finally, any remaining savings will be used to reduce retail open access
customers' transition charges.
Commissioner Robert Nelson concurred in all aspects of today's order except
for the inclusion of capital additions to Fermi II after 1998 in the amount
approved for securitization. He indicated that Detroit Edison had not
demonstrated that the costs of these additions were either prudently incurred
or unlikely to be collected in a competitive market.
MPSC staff, Detroit Edison, Attorney General Jennifer Granholm, the
Association of Businesses Advocating Tariff Equity, Energy Michigan, the
Michigan Environmental Council and the Public Interest Research Group in
Michigan, Unicom Energy, Inc., Dow Corning Corporation and Hemlock
Semiconductor Corporation, the Michigan Community Action Agency
Association, the Michigan Chamber of Commerce, Plastipak Packaging, Inc.,
Bay Windpower, L.L.C., the Michigan Electric and Gas Association, PG&E
Corporation, the Midwest Independent Power Suppliers Coordination Group,
CMS MS&T Michigan L.L.C, and CMS Marketing, Services and Trading
Company participated in the proceeding.
Detroit Edison, headquartered in Detroit, provides electric service to 2.1
million customers in southeastern Michigan.
The MPSC is an agency within the Department of Consumer and Industry
Case No. U-12478
November 2, 2000
(MPSC authorizes Detroit Edison to securitize $1,774,202,000 in regulatory