DETROIT, Feb. 8, 2005 (PRNewswire-FirstCall) — Detroit Edison filed a proposal with the Michigan Public Service Commission (MPSC) to restructure its electric rates and begin phasing out subsidies that have long been part of its pricing structure. The proposal follows a November Detroit Edison rate order in which the MPSC ordered the company to address the issue by filing a proposal before March 23, 2005.
“The proposal will provide no new revenue for Detroit Edison,” said Michael Champley, DTE Energy Senior Vice President, Regulatory Affairs. “Rather, it will provide for restructured rates so that customers pay for the actual cost of their electric service.”
The vast majority of Michigan’s business customers, nearly 175,000 businesses, will see real and immediate savings from the electric rate restructuring proposal when approved. It will reduce business rates, which historically have exceeded the actual cost to serve business customers.
“Our business customers can ultimately realize savings of 15 percent to 25 percent, depending on their size and energy usage,” Champley said.
Beginning in 2007, residential customer rates will gradually move toward their actual cost. To minimize the impact on residential customers, the new rates will be phased in over a five-year period. At the end of the five-year phase-in period in 2012, the increase to a typical residential customer will be in the neighborhood of $6.50 per month as the result of the rate restructuring proposal.
“This proposal makes sense for both residential and business customers by gradually phasing out long-standing rate inequities,” Champley said. “Left unchecked, the current rate structure would likely lead to steep future rate increases for residential customers, which would be difficult for them to absorb. All customers’ costs will now be appropriately and fairly allocated.
“The phase-in of restructured residential customer rates allows for a managed and controlled process, minimizing the cost impact on our customers,” Champley said. “Detroit Edison’s rates continue to remain an incredible value for our residential customers. When the restructuring of rates is completed in 2012, the typical residential customer will only pay about $5 a month more than they did two decades earlier.
“This rate restructuring proposal also tackles the MPSC’s mandate of separating the costs of generating and delivering electricity, which will help customers better understand the various cost components of their bills,” Champley said. “We are confident that the allocation of costs has been done appropriately and that the MPSC review will validate our proposal.”
About Detroit Edison [ www.dteenergy.com ]
Detroit Edison is an investor-owned electric utility serving 2.1 million customers in Southeastern Michigan and a subsidiary of DTE Energy, a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide.