Printer Friendly

CONSUMERS POWER COMPANY, MPSC STAFF, OTHERS ANNOUNCE REVISED SETTLEMENT PROPOSAL

 CONSUMERS POWER COMPANY, MPSC STAFF, OTHERS
 ANNOUNCE REVISED SETTLEMENT PROPOSAL
 JACKSON, Mich., July 8 /PRNewswire/ -- Consumers Power Company announced today that it has filed a revised settlement proposal with the Michigan Public Service Commission (MPSC) to resolve all outstanding contract issues associated with the utility's purchase of electricity from the Midland Cogeneration Venture (MCV). The revised proposal addresses major concerns expressed by the MPSC in its April order rejecting an earlier proposal.
 Signatories to the new settlement proposal are the MPSC staff, the developers of 13 independent cogeneration and small power projects involved in the MCV case and Consumers Power Company. The proposal needs MPSC approval to become effective and would end litigation among the parties in at least ten outstanding MPSC and court cases.
 If approved, the immediate impact of the new proposal would be to raise the monthly electric bill to a typical residential customer using 500 kilowatt-hours (kWh) by 95 cents or 2.8 percent. This initial increase would be offset by a refund of approximately three percent. More importantly, approval of the proposed settlement would save the utility's electric customers about $1 billion over the next 15 years that would otherwise result from implementation of existing MPSC orders in the MCV case.
 Under the proposed new settlement, the amount of generating capacity from the MCV allowed in Consumers Power's rates would be 915 megawatts rather than the 1240 megawatts in the utility's contract with the MCV. The allowed price for this capacity would be 3.62 cents per kWh backloaded for 10 years at a reduced carrying charge of 8.99 percent, instead of the previously authorized 3.77 cents per kWh backloaded over 17-1/2 years at a carrying charge of 11.4 percent. Beyond the 10th year, the capacity rate for the first 840 megawatts of the total capacity would be 3.77 cents per kWh and 3.62 cents per kWh for the remaining 75 megawatts. Capacity payments recovered in rates would be based on plant availability according to a negotiated cap rather than actual energy delivered.
 The new proposal would also allocate 198 megawatts of electric generating capacity to independent cogeneration and small power projects in addition to the 92 megawatts previously committed. However, during the several years before these small cogeneration projects come on line, the MCV would provide Consumers Power Company that power. The price for this MCV power allowed in rates would be a discounted capacity rate of 2.75 cents per kWh for up to an additional 108 megawatts in 1993 and 138 megawatts in 1994 and thereafter for a period of up to five years until the independent cogenerators and small power projects enter service.
 Future increments of generating capacity needed by Consumers Power beyond the total megawatts contained in the proposed settlement are expected to be competitively bid in accordance with the MPSC's recent competitive bidding order. The uncommitted MCV capacity could compete against other interested developers in a future bid or could be sold to third parties.
 Finally, the proposed settlement, if approved by the MPSC, is expected to result in a pre-tax charge to earnings of between $200 million and $300 million.
 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.
 FACT SHEET
 REVISED SETTLEMENT PROPOSAL RESOLVING MCV REGULATORY ISSUES
 PARTIES: MPSC Staff, the developers of 13 independent cogeneration and small power projects involved in the MCV case and Consumers Power.
 SIGNIFICANT ELEMENTS:
 -- Increase in the monthly electric bill to a typical residential customer using 500 kWh by 95 cents or 2.8 percent offset initially by a refund of about three percent. Saves Consumers Power's electric customers about $1 billion over the first half of the MCV contract when compared to the original orders in the MCV case.
 -- Reduces the amount of MCV megawatts to be allowed in Consumers Power rates from the 1240 megawatts Consumers Power is required to purchase under the MCV contract to 915 megawatts.
 -- Reduces the average capacity charge electric customers would pay for those megawatts to 3.62 cents per kilowatt-hour backloaded from the MPSC's original MCV rate order level of 3.77 cents per kilowatt-hour backloaded.
 -- Changes the backloading period for the rates from 17 1/2 years in the original MCV order to 10 years and reduces the interest rate from 11.4 percent in the original MCV rate orders to 8.99 percent.
 -- Capacity payments in rates will be made on the basis of plant availability rather than actual energy delivered. Off-peak availability will be capped at 80 percent in 1992 and 1993 and will rise in increments to 88.7 percent in 1998 and thereafter. On-peak availability will have no cap until 1998 when it too will be capped at 88.7 percent.
 -- Encourages development of a diverse, non-utility power generation industry in Michigan by Consumers Power agreeing to purchase 290 megawatts of capacity from independent cogeneration and small power producers.
 -- Requires Consumers Power to assure electric customers their total cost of replacement power will be no more than the cost of MCV power under the settlement proposal if the MCV does not meet its contractual commitments to provide power under its power purchase agreement.
 -- Commits Consumers Power to no more than a 20 percent reserve margin in the future for purposes of determining the next block of needed capacity additions.
 -- Commits Consumers Power to dismiss current pending litigation, assuring approximately $163 million of MPSC-ordered savings to electric customers currently at issue and making approximately $70 million available for refund to customers.
 -- Ends MCV-related litigation among the parties in at least ten outstanding MPSC and court cases.
 DIFFERENCES BETWEEN THE PROPOSED JOINT STIPULATION REJECTED BY
 THE MPSC APRIL 2, 1992 AND THE PROPOSED SETTLEMENT FILED TODAY
 -- The proposed settlement is supported by the MPSC staff and Consumers Power -- both of whom supported the joint stipulation -- as well as the developers of thirteen independent cogeneration and small power projects:
 1. Commonwealth Power Company
 2. Dow Chemical Company
 3. City of Flint
 4. Grand River Equities, Inc.
 5. Indeck Energy Services of Baldwin, Inc.
 6. Indeck Energy Services of Otsego, Inc.
 7. Jackson Energy, Inc.
 8. Kirkway Electric Corporation
 9. Muskegon Generation, Inc.
 10. St. Joseph Lake and Land Development Corporation
 11. Thermo Michigan, Inc.
 12. S. D. Warren Company (two projects)
 -- The proposed settlement provides up to 290 megawatts of capacity to independent non-utility power producers versus the approximately 100 megawatts in the joint stipulation.
 -- The proposed settlement reduces the amount of MCV capacity allowed in rates from 1053 megawatts to 915 megawatts (versus 1240 megawatts in the Consumers Power contract with the MCV).
 -- The proposed settlement provides that up to an additional 138 megawatts of MCV capacity can be used to satisfy Consumers Power interim power needs during the period prior to that in which the independent cogeneration and small power projects come "on line."
 -- The proposed settlement reduces the capacity charge to be paid to the MCV from 3.77 cents backloaded to 3.62 cents backloaded for the first ten years.
 -- The joint stipulation had no negotiated MCV availability cap for payment by customers as is contained in the proposed settlement.
 -- The proposed settlement does not bind the MPSC staff in any way as to its activities relating to future legislative or regulatory actions affecting future energy supply options.
 -- The proposed settlement contains no payments by Consumers Power or CMS Energy to defray any of the parties' previous litigation expenses.
 -- The proposed settlement greatly narrows the scope of issues to be resolved compared to the breadth of the joint stipulation.
 -- The proposed settlement provides flexibility not contained in the joint stipulation for the MPSC to resolve relevant issues.
 -- The proposed settlement provides for no special rate design for any class of customer, unlike the previous settlement proposal which included provisions for new interruptible rates and experimental retail wheeling.
 -0- 7/8/92
 /CONTACT: Charles E. MacInnis of Consumers Power Co., 517-788-0333/
 (CMS) CO: Consumers Power Company; CMS Energy Corporation ST: Michigan IN: UTI SU:


ML -- DE004 -- 7280 07/08/92 08:49 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 8, 1992
Words:1370
Previous Article:NATIONSBANK PLANS TWO NEW BRANCHES IN ATLANTA
Next Article:AN UNCONVENTIONAL SURVEY JUST IN TIME FOR THE CONVENTION
Topics:


Related Articles
CONSUMERS POWER FILES FOR MPSC TO DETERMINE NEED FOR POWER LINE
UTILITIES OPPOSE PROPOSED CONSUMERS POWER SETTLEMENT
MICHIGAN UTILITIES OPPOSE INCREASED MCV PURCHASES
MPSC SETS HEARING SCHEDULE FOR MCV SETTLEMENT PROPOSAL
CONSUMERS POWER TRYING TO TAKE OVER COMPETITORS, SAYS MICHIGAN MUNICIPAL COOPERATIVE GROUP
TRAVERSE CITY RECEIVES FAVORABLE RULING IN DISPUTE WITH CONSUMERS POWER
MPSC APPROVES MCV SETTLEMENT WITH MODIFICATIONS
CMS ENERGY ANNOUNCES SETTLEMENT WITH MPSC STAFF
ATTORNEY GENERAL KELLEY SETTLES WITH DETROIT EDISON
MICHIGAN COURT OF APPEALS AFFIRMS MPSC DECISION SETTLING RATE ISSUES RELATED TO THE MIDLAND COGENERATION VENTURE

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters