DTE, Consumers Energy to Offer Time of Use Rates

Large commercial and industrial utility customers are likely to see some rate relief soon, as the Michigan Public Service Commission rolls out time-of-use (TOU) pricing for DTE Electric and Consumers Energy.

Already implemented in Arizona – and scheduled to begin in California by 2019 – TOU rates typically are quite lucrative for utility customers that use a substantial amount of power during off-peak hours, such as nights, weekends and holidays. These may include chain retailers or restaurants, government agencies and manufacturing plants.

To date, residential ratepayers have not participated as fully as possible in TOU pricing; however, that is beginning to change: Just this month, California regulators put pressure on the state’s three investor-owned utilities to run pilot tests that would charge homeowners more when electricity usage is at its peak. In addition, multiple states are using TOU rates to encourage the acceptance of plug-in electric vehicles.

In Case No. U-17689 for DTE Electric, the PSC on June 30 authorized the utility to implement rates based on the commission's June 15 order, which was approved with a two-to-one vote. That order directed:

• DTE Electric to make TOU rates and dynamic peak pricing available to all customers who have had advanced metering infrastructure (AMI) for at least one year and who wish to opt in.
• The utility to file a plan within 90 days describing the company's strategies for education, outreach, marketing and customer support of time-of-use rates and other pricing options that are, or will be, available to DTE Electric customers.

Effective July 1, DTE Electric customer bills will be affected as follows: the primary customers will pay about 4.7 percent less; the secondary customers will pay approximately 0.3 percent less; the residential customers will pay about 3.7 percent more; and the other/lighting class will pay approximately 8.7 percent less.

In Case No. U-17688 for Consumers Energy, which also was approved on a two-to-one vote, the commission mandated:

• Consumers Energy to make TOU rates and dynamic peak pricing available by January 1, 2017, to any customer who has a smart meter and who wishes to opt-in to a TOU program; and
• The utility to file a plan by January 5, 2016, describing the company's strategies for education, outreach, marketing and customer support of TOU rates and dynamic peak pricing.

Effective December 1, the PSC said, the average Consumers Energy electric bill by customer class will be affected as follows: Primary customers will pay approximately 4.4 percent less than they do now; commercial and industrial secondary customers will pay approximately 0.3 percent less; and the average residential customer bill will increase by about 3.2 percent.

Public Act 169 of 2014 required the PSC to commence proceedings for DTE Electric and Consumers Energy to explore whether a modification of the statutorily-required 50-25-25 method of cost allocation adopted by the Legislature in 2008 could be modified to better ensure rates are equal to the cost of service, as well as being affordable and competitive for all customer classes.