The Michigan Public Service Commission has granted one utility company in the state of Michigan the authorization to securitize its stranded costs to help reduce power rates in the state last month, and one other gained approval last Thursday.
The Commission agreed last Thursday to allow DTE Energy Co.'s Detroit Edison to securitize up to $1.774 billion in stranded costs, resulting from a 5% residential rate reduction that took effect in June. The figure is slightly less than the $1.84 billion DTE had requested, but the company is pleased with the Commission's action.
"What this will allow us to do is to pass additional rate reductions along to our commercial and industrial customers, our business customers, as well as provide some funding toward a low income and energy efficiency fund," said Lorie Kessler, a spokeswoman for DTE. "We're pleased because, barring any appeal that would delay that, all of our customers now benefit from securitization and the legislation that was enacted last June."
Consumers Energy, a subsidiary of CMS Energy Corp., was the first to submit a filing to the Public Service Commission, and was issued a financial order to securitize $469 million in stranded costs.
As for CMS, "We're still studying the order, and we'll have to make a filing whether we accept the order, which I expect we will do," said Kelly Farr, a spokesman for CMS. "I don't believe we've selected a financial advisor, or we may just handle it ourselves."
CMS is planning on issuing bonds either late this year or early next year, as a provision in Michigan legislation to reduce residential energy rates by 5%.
In June, the Michigan Legislature passed legislation that restructured the electric industry in Michigan. The legislation allows consumers to choose their power provider, but doesn't deregulate the industry. It also grants approval for the utility companies to securitize stranded costs.