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DTE Electric seeks rate increase of $328M for system costs, EV program

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DTE Electric seeks rate increase of $328M for system costs, EV program

DTE Energy Co.'s electric utility applied for a $328 million increase to base rates and to modify its tariffs to account for new residential pilot programs and its electric vehicle program.

In its July 6 application, DTE Electric Co. asked the Michigan Public Service Commission to approve new rates effective as early as June 6, 2019, which will provide enough time for the utility to recover plant addition costs such as those associated with generation and distribution systems. The additional revenues would also help cover capital structure costs and increased operating and maintenance costs, as well as accounting standard changes, DTE Electric said in its application. (Michigan PSC Case No. U-20162)

The request, equal to a 6.7% increase, is premised on a 10.5% return on equity and an average rate base of about $17.2 billion and a test year ending April 30, 2020.

Of the total request, about $215 million is for plant additions and another $182 million reflects revised depreciation rates the utility proposed in a separate proceeding (Michigan PSC Case No. U-18150), according to DTE Electric's July 6 Form 8-K. These amounts are offset by $196 million in credits to electric bills in light of federal tax reform legislation in 2017, which lowered the corporate income tax rate to 21% from 35% beginning in 2018.

In addition, DTE Electric requests to change certain tariffs in light of various pilot programs, time-of-use offerings, and other adjustments. For instance, the utility proposed that the commission reverse a prior decision and let customers choose whether to participate in existing time-of-use programs that charge separate peak and off-peak rates for electricity. The utility is also requesting a waiver from the commission's residential billing rules to implement two pilot programs: a "Weekend Flex" pilot program, which allows customers who enroll to receive a fixed monthly charge for weekend electricity usage, and a fixed-bill pilot program, which charges a fixed monthly bill. The utility also asked the commission to approve the electric vehicle program it proposed in February, called Charging Forward.

DTE Electric's application is based on a test year running from May 1, 2019, to April 30, 2020.