|John G. Strand, Chairman || Dorothy Wideman|
|David A. Svanda || Mary Jo Kunkle|
|Robert B. Nelson|| 517.241.6160|
LANSING, October 24. The Michigan Public Service Commission today
authorized, by a 2-1 vote, Consumers Energy Company to proceed with the
sale of securitization bonds, granting the company authority to securitize up to
$468,592,000 of its regulatory assets under provisions of the Customer Choice
and Electricity Reliability Act of 2000. Today's order also grants Consumers
Energy 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 $0.00205 per kilowatt-
hour and a tax charge of not more than $0.00025 per kWh on customers'
monthly electric bills. The securitization charges and tax charges 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, Consumers Energy 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 Consumers
Energy 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. All remaining cost savings will be applied, in
equal proportion, to reduce the distribution charge of each non-residential
customer on the company's electric system and to reduce retail open access
customers' transition charges.
Commissioner Robert Nelson concurred in part, and dissented in part, in
today's decision. Mr. Nelson concurred with many of the findings in today's
order, but took issue with the Commission's findings that Consumers Energy
had met all of the tests for securitization set forth in the new law. He therefore
concluded that securitization should not be allowed at this time, based on the
record before the Commission and the fact that Consumers Energy had not
demonstrated tangible and quantifiable benefits from securitization.
MPSC staff, Consumers Energy, 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; The Dow Corning Corporation and Hemlock Semiconductor
Corporation, the Michigan Community Action Agency Association; the
Michigan Chamber of Commerce; Midland Cogeneration Venture Limited
Partnership; the Michigan Electric and Gas Association; PG&E Corporation
and the Midwest Independent Power Suppliers Coordination Group
participated in the proceeding.
Consumers Energy, headquartered in Jackson, provides electric service to
more than 1.6 million customers.
The MPSC is an agency within the Department of Consumer and Industry
Case No. U-12505
October 24, 2000
(MPSC authorizes Consumers Energy to securitize $468,592,000 in regulatory