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Consumers Energy rate hike request includes money for electric vehicle program

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Consumers Energy rate hike request includes money for electric vehicle program

Consumers Energy Co. asked Michigan regulators to raise its retail electric rates by $58 million to help cover ongoing investments and, specifically, a program to stimulate electric vehicle charging infrastructure.

In a May 14 application to the Michigan Public Service Commission, Consumers Energy, a subsidiary of CMS Energy Corp., asked to increase retail rates in the test year 2019 as its revenues appear insufficient to cover investments.

"Without a rate increase, the company's revenues and electric overall rate of return will be below a just and reasonable level," Consumers Energy said.

The utility, which serves 1.8 million retail electric customers in Michigan, is also seeking approval for a "foundational infrastructure program" designed to build a market for electric vehicles. The program is designed to increase customer education and better understand both individual and public charging needs, Consumers Energy said. The utility asked the PSC to let it defer rate recovery for the program costs until after 2019. If approved, Consumers Energy plans to invest $7.5 million in a three-year program, with $3.8 million invested in the first year.

The rate increase comes as the commission in August 2017 and in February 2018 held technical conferences to assess opportunities for electric vehicles and charging in the state. Both Consumers Energy and DTE Energy Co. on Feb. 9 shared their visions for electric vehicle pilot programs. In a presentation, Consumers Energy suggested its foundational infrastructure program could include measures encouraging residential charging, public or workspace charging, fast charging and back-end IT infrastructure to support charging.

In its rate increase application, Consumers Energy seeks to use a surcharge called an investment recovery mechanism to recover investments made through 2019 in six specific electric distribution programs: new business, reliability, capacity, demand failures, asset relocation and electric operations, James Anderson, the company's executive director of electric transmission, told the PSC in testimony.

The additional revenues, if approved, would raise rates about 1.4% above rates last approved by the PSC in March, Consumers Energy said in a May 11 letter. Depending on monthly usage, a residential customer could over a full year see a slight decrease to an annual increase of 1.3%, a company representative said.

On March 29, the PSC authorized the utility to increase base electric rates by $65.8 million, which was premised on a 10% rate of return on the equity and 5.89% overall rate of return on its rate base. (Michigan PSC Case Docket U-18322)

Its latest application is premised on a 10.75% rate of return on equity and 6.33% rate of return, which together indicate the firm's future returns. The PSC has 10 months to act on the request and has scheduled a pre-hearing on the application for June 1. (Michigan PSC Case Docket U-20134)