Nessel intervenes in DTE request for 11% residential gas cost increase

Breana Noble
The Detroit News

Michigan Attorney General Dana Nessel is calling on the Michigan Public Service Commission to slash a rate increase for DTE Energy Co. gas customers, calling it "excessive and unreasonable."

DTE Gas Co. is requesting a $195 million increase mostly for infrastructure investments for its 1.3 million customers across the state. That translates to an 11% increase for residential customers, Nessel said in a Monday statement. Her office is recommending a $19 million increase — a hike of 2% for residential customers — to keep natural gas prices affordable to heat homes and run appliances, according to testimony filed last week with the commission.

Michigan Attorney General Dana Nessel's office is recommending a rate increase of $19 million for DTE Energy Co. natural gas customers versus the Detroit-based utility's requested $195 million increase.

“Michiganders have been through a lot over the past year-plus, and I want to help make sure ratepayers are not blindsided by large increases in utility bills just when we are starting to see signs of returning to normalcy,” Nessel said in a statement.

“While I certainly appreciate utility commitments to improve natural gas infrastructure in the state to ensure that our natural gas supply is safe and reliable, unnecessary and excessive expenditures must be avoided. My testimony in this case appropriately balances those concerns and offers a reasonable resolution for all ratepayers.”

Rate cases typically occur every or every other year. DTE says its request is seeking to continue to implement recommendations from forecast studies and the 2019 Statewide Energy Assessment following a fire at a Consumer Energy natural gas storage facility that year during a polar vortex.

"We appreciate and share the attorney general's concern to keep energy costs affordable," spokesman Peter Ternes said in a statement. "We look forward to working through the rate case process to demonstrate how our investments in the natural gas system will improve reliability, reduce emissions, maintain safety, and keep costs to a minimum."

Gas commodity costs are down 30% over the past decade, the company added, saying it continues to be the most affordable heating solution.

"When the cost of natural gas drops, DTE passes the savings on to consumers and is a longtime supporter of agencies that provide financial assistance to vulnerable customers," Ternes said.

The requested increase is not related to DTE's spin-off off its pipeline business as DT Midstream in July, Ternes said.

The 418-page testimony presented by Sebastian Coppola, a business consultant commissioned by the attorney general's office to review the case, notes DTE Gas met or surpassed its approved return-on-equity rate from 2015 to 2019. Coppola argues that demonstrates DTE's lack of need for all of its requested increase. Its return on equity was 10.6% in 2019.

DTE Energy's 11% rate increase request for residential gas customers faces pushback from Attorney General Dana Nessel.

To make up the difference, Coppola recommends that the company work to increase its gas sales; reduce operational, maintenance and capital expenditures such as for projects that lack sufficient engineer analysis to support the increase; and reduce its return-on-equity authorization to 9.5% from the requested 10.25%.

"Until 2012, the company was able to keep capital expenditures below $200 million annually," Coppola said in the testimony. "Eight years later, the level of annual capital expenditures has more than doubled, to $524 million."

By intervening in utility rate cases, Nessel has helped Michigan residents save more than $1 billion since she became attorney general in 2019, according to her office.

Twitter: @BreanaCNoble