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CONSUMERS POWER ASKS MPSC FOR $165 MILLION ELECTRIC RATE INCREASE

 JACKSON, Mich., May 10 /PRNewswire/ -- Consumers Power Company today asked the Michigan Public Service Commission (MPSC) for permission to increase its electric rates in three steps, to be phased in over the next three years.
 The company has proposed an immediate interim increase of $92.1 million, or 4.4 percent, followed by a $35.1 million increase, or 1.7 percent, in 1994. A $38.4 million, or 1.7 percent, increase is requested beginning on Jan. 1, 1995. The total requested increase of $165.6 million represents an average annual increase of about 2.5 percent -- less than anticipated inflation during the period -- over the next three years.
 Fred Buckman, Consumers Power's president and chief executive officer, said, "We're glad that we are able to keep this rate increase request below the rate of inflation while continuing to make larger investments and improve our customer service." Buckman pointed out that "Even with the proposed rate increases, Consumers Power's electric rates would be significantly below those of the other major electric utility in Michigan and very competitive on a regional and national basis." Since 1988, Consumers Power's electric rates have increased about 1 percent per year, again well below the rate of inflation during the same period.
 Buckman also said the proposed increases are needed to recover the company's additional investments in production, transmission and distribution facilities. "Consumers Power's current rates, which are based on 1991 expenditures, do not adequately reflect the company's increased capital investments and spending on operations and maintenance, including our service reliability improvements, and future demand side management programs."
 Consumers Power's proposal would restructure electric rates to gradually reduce, by 60 percent, the current subsidization of residential customers by commercial and industrial customers. "With Consumers Power's residential electric rates historically lower than more than three-fourths of the nation's utilities, we're proposing a more equitable distribution of electric costs to stimulate business and industry growth in Michigan for creation of future jobs," Buckman said. "Correcting business and industry's disproportionately large share of present electricity costs should help Michigan's competitive position in attracting industrial jobs to the state," Buckman added.
 Because Consumers Power is trying to reduce this cross subsidization, which has been in effect for years, a typical residential customer's 500 kilowatt-hour bill would increase by $4.61 per month in the first year, and by an additional $2.87 per month to a total bill of $44.29 by 1996. The typical commercial electric customer, using 6,000 kilowatt-hours with a 30 kilowatt demand, would receive a $17.58 per month increase for a total bill of $614.39 by 1996. A typical industrial customer's bill would increase by $22.00 to a monthly bill of $23,912 by 1996.
 The filing also proposes experimental incentive provisions that would either reward or penalize Consumers Power, based on its operating performance. Under the proposal, a potential reward or penalty of up to three percentage points on the electric utility's return on equity would be based on Consumers Power's performance in the areas of cost competitiveness, customer satisfaction, service reliability and plant availability. In addition, in exchange for the ability to earn not lower than one percentage point below its authorized level, the company's proposal would share any returns above its MPSC authorized level with customers.
 Of the total requested increase, approximately $30 million is to account for post-retirement health care costs for the utility's employees, as required in the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106. Approximately $41 million is to account for the higher level of spending Consumers Power is now incurring to operate, maintain and improve its electric system and the service it renders to its customers.
 Consumers Power Company, the principal subsidiary of CMS Energy Corporation (NYSE: CMS), is Michigan's largest natural gas and electric utility serving almost 6 million of the state's 9 million residents in 67 of the 68 Lower Peninsula counties.
 -0- 5/10/93
 /CONTACT: Charles E. MacInnis of Consumers Power News and Information, 517-788-0333/
 (CMS)


CO: Consumers Power Company; CMS Energy Corporation ST: Michigan IN: UTI SU:

ML -- DE016 -- 6537 05/10/93 14:04 EDT
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Date:May 10, 1993
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