Michcon Con

[rb336]

http://tinyurl.com/n3vtfm

This one slipped under the wire. They should have to eat it, like any other company eats losses, or go after the owners/asigns of those defaulted bills.

Is there any way we can make the MPSC accountable for rubber-stamping virtually everything these guys ask for?

ditto the Office of Financial and Insurance Regulation

[rb336]

complain to:

mpsc_commissioners@michigan.gov

[East Detroit]

Under this plan, will they then consider the unpaid bills to be paid and leave service on for those people?

[Johnnny5]

How is this any worse than how other less regulated companies pass on the cost of uncollected bills?

Unlike most companies, MichCon does not have the luxury of raising the price of their product in order to makeup for their deadbeat customers. At least in this scenario we get to see what the true cost is to those of us who actually pay our bills.

[MikeM]

This is not the first time the commission has approved an uncollectibles surcharge and it's too late to complain to the MPSC this time because they have already issued the order. State regulators usually view their function as to provide for the public's interest, not the consumer's interest.

[ccbatson]

Yet another example of government screwing up commerce.

[MikeM]

I was looking through some bills earlier today and decided to take a look at my gas bills. A couple of years back, the surcharge total for uncollectibles ran from a few cents to a couple of dollars: $0.14 in August, $1.77 in January. The surcharge rate was raised the following year, and then the spread was from $0.38 to $4.58. Most of the months is was less than a dollar - and I have an old house with 60-year-old windows, and a 48-year-old furnace.

This one slipped under the wire.

Hardly:

In its application filing to the MPSC back on September 30, 2003:

MICHIGAN CONSOLIDATED GAS COMPANY files this Application requesting authority to increase rates, amend its rates schedules, obtain approval of certain accounting matters and modify certain terms and conditions of providing natural gas services. In support of this Application, MichCon represents to the Michigan Public Service Commission as follows:

...In the ten [[10) years since its last retail distribution rate increase, MichCon has utilized prudent management of its costs and expenditures to manage its financial position despite significant changes in the world economy and other historic events. However, these opportunities have been outstripped by recent external forces that place MichCon in a position where it can no longer maintain a reasonable return on equity or recover its costs of operation without an increase in its retail natural gas distribution rates. Additional revenues are necessary to pay for the revenue impacts of:

• increased costs associated with providing employee and retiree pension and healthcare benefits;
• the increased costs associated with the physical security of the Company’s natural gas pipeline system;
• increased costs of company use and lost gas;
• reduced revenues due to significant declines in consumption related to more efficient natural gas equipment;
• reductions in end-use transportation;
• the increased operation and maintenance costs and capital expenditures necessary to maintain safe, reliable operation of MichCon’s distribution system;
• higher depreciation expense and the costs to remediate former manufactured Gas Plant sites.

Through prudent management, MichCon has been able to avoid increases to its retail natural gas distribution rates for ten years. However, the factors described above, many of which are external to the Company, have outstripped MichCon’s ability to recover its prudently incurred costs of operation and maintain a reasonable return on equity without increasing rates. The supporting evidence submitted by MichCon in this proceeding demonstrates that the Company is projected to suffer a $153.7 million base revenue deficiency in 2004, and a $193.6 million base revenue deficiency in 2005. In order to maintain MichCon’s financial health and continue to provide reliable and safe natural gas services, timely rate relief is necessary.

The first public hearing in this matter will be held:

DATE: Wednesday, December 10, 2003. This hearing will be a prehearing conference to set future hearing dates and decide other procedural matters.

PRESIDING OFFICER: Administrative Law Judge Mark E. Cummins

LOCATION: Michigan Public Service Commission
6545 Mercantile Way, Suite 7
Lansing, Michigan 48909

PARTICIPATION: Any interested person may attend and participate.

The Michigan Public Service Commission will hold public hearings to consider Michigan Consolidated Gas Company’s September 30, 2003 request to amend its natural gas distribution rates to increase its gas distribution revenues in the annual amount of $193,632,000.

A member of the public who wishes to make a statement of position without becoming a party to the case may participate by filing an appearance. To file the appearance, you must attend the hearing and advise the presiding Administrative Law Judge of your wish to make a statement of position.

The Utility Consumer Representation Fund aids the representation of residential utility customers in some energy hearings. Contact the Chairperson, Utility Consumers Participation Board, Department of Commerce, P.O. Box 30004, Lansing, Michigan 48909 for more information.

At the April 28, 2005 meeting of the Michigan Public Service Commission in Lansing, Michigan it was noted that,

Evidentiary hearings were held on May 18 and 24, and August 23, 2004. The record consists of 1,524 pages of transcript and 110 exhibits.�

The ALJ recommended adoption of MichCon’s Uncollectible Expense True-up Mechanism [[UETM), as modified by the Staff.

No exception was filed to the ALJ’s recommendation. The Commission finds that MichCon’s uncollectibles expense level should be set at the Staff’s recommended level.

Many factors affect uncollectibles expense, including the state’s economy, the price of natural gas, the absolute total amount of customer billings, and the amount of state and federal aid that is available for heating assistance. Of these factors, the single largest influence on uncollectibles expense is the cost of natural gas, which has been increasing significantly during the immediate past. The high price of natural gas, when coupled with reductions in government funding available to MichCon’s low-income customers and the significant unemployment level in MichCon’s service territories, has resulted in a large increase in uncollectible accounts. These factors are largely beyond MichCon’s control.

In its testimony regarding uncollectibles expense, MichCon stressed that state and federal heating assistance aid have been reduced, which has significantly increased the company’s uncollectible accounts. MichCon states that in 1993 its customers received approximately $42 million in energy-cost assistance; but that by 2002 that figure had dropped to $3 million due to legislative revisions in assistance programs, and this funding would be eliminated as of 2003. The company also testified that during 2002 its service territory contained 50% of the state’s low income population but that MichCon’s customers were allocated only 28% of the state’s available home heating credits, which further increases pressure on the company’s uncollectible accounts.

THEREFORE, IT IS ORDERED that:

A. Michigan Consolidated Gas Company is authorized to increase its annual gas revenues by $60,756,000 for service rendered on and after the day following issuance of this opinion and order [and]…
G. The Uncollectible Expense True-up Mechanism, as clarified by the Commission Staff, shall be implemented, and shall remain in effect until a final order is issued in Michigan Consolidated Gas Company’s next general rate case; Michigan Consolidated Gas Company shall make the necessary Uncollectible Expense True-up Mechanism filings on or before March 31 of each calendar year.

Then in this year’s application of March 30, 2009 it was noted that:

During the 2008 calendar year MichCon’s actual uncollectible expenses totaled $125.6 million, $88.3 million over the amount in MichCon’s base rates.

[MikeM]

Finally, at the August 25, 2009 meeting of the Michigan Public Service Commission in Lansing, Michigan:

On March 30, 2009, MichCon filed an application, with supporting testimony and exhibits, requesting that the Commission approve its UETM computation of $86.9 million and proposed surcharges and its report regarding its S&T related expenditures for 2008.

Administrative Law Judge Mark E. Cummins [[ALJ) conducted a prehearing conference on May 21, 2009. At that time, Attorney General Michael A. Cox [[Attorney General) was recognized as an intervenor. The Commission Staff [[Staff) also participated in the proceeding. On August 12, 2009, the Attorney General’s motion to withdraw as an intervenor was granted.

Subsequently, MichCon and the Staff submitted a settlement agreement resolving all issues in the case.

According to the terms of the settlement agreement, attached as Attachment A, the parties agree that MichCon’s filing represented an accurate depiction of the company’s 2008 uncollectible expenses and an accurate calculation of the UETM surcharge. Given current economic conditions, MichCon agrees to moderate the impact of the UETM on customers by implementing the UETM surcharge over a 15-month time frame—rather than the 12-month time frame contemplated in its filing. MichCon further agrees to implement the UETM surcharge beginning September 1, 2009, if the Commission issues an order approving the settlement agreement by August 25, 2009.

After review of the settlement agreement, the Commission finds that its terms are reasonable, and that its approval is in the public interest.

THEREFORE, IT IS ORDERED that:

A. The settlement agreement, attached as Attachment A, is approved.
B. Michigan Consolidated Gas Company’s application to revise its uncollectibles expense true-up mechanism surcharges is granted. The new surcharges shall apply to services rendered beginning on September 1, 2009 as reflected on the tariff sheet attached to the settlement agreement as Attachment 1.
C. etc

Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order, under MCL 462.26.

[East Detroit]

I don't have a problem paying extra to cover the costs of those who can't afford to pay for heat and electricity.

I already give to THAW.

Yet, I still would like to know what happens to the extra collections. Do they subsidize those who can't pay, or do they harass them and turn off their heat and lights and then take our money anyway?

[MikeM]

The extra collections [[mostly) go to pay for the gas that was already used and never paid for. There is a provision that they have to refund any surcharges collected above any loss actually incurred.

I don't know how they handle customers who don't pay. The way the economy has been, a lot would have to be the result of bankruptcies [[personal and commercial). How do you collect from someone who is bankrupt? Where does a utility stand in the line of unsecured creditors? How does a utility repossess its product?

[rb336]

This is not the first time the commission has approved an uncollectibles surcharge and it's too late to complain to the MPSC this time because they have already issued the order. State regulators usually view their function as to provide for the public's interest, not the consumer's interest.

more like for the CORPORATE interests, not the public's

[Sstashmoo]

MikeM,

You make it sound as though we live in old Communist Russia. Where we are responsible for the common good of a public [[private) entity. Penalizing responsible customers for the irresponsibility and misfortune of others and making them pay up. If it is simply for the public and a public service, they should never shut anyone's service off. Don't pay your bill and you'll see the free market in action.

Quote: "How does a utility repossess its product?"

It's a service. They provided a service and didn't get paid? Happens all the time and why we have methods of recovery like small claims court and collection agencies.

If my neighbor doesn't pay his bill for his service, how is that my fault?

[rajdet]

WTF? I am so angry right now I need to go out and be someplace serene B4 I do something stupid.

[MikeM]

more like for the CORPORATE interests, not the public's

That is the public interest. You're confusing consumer interest with public interest. As a consumer, my interest is for my gas to be free.

It's a service. They provided a service and didn't get paid?

Don't allow MichCon to collect. Let them keep losing money and go out of business then go buy a wood stove and live like you're in Russia.

[rb336]

sorry, corporate interests are not the public interest. they can be, or they can be against the public interests.

so sad that you confuse the two

[rb336]

Don't allow MichCon to collect. Let them keep losing money and go out of business then go buy a wood stove and live like you're in Russia.

i'm perfectly willing to let them collect -- from the people who actually OWE the money. the rest of that sentence is total nonsense

[MikeM]

The corporate interst is the public interest. Having a viable business to provide an important product is the public interest. [[Or maybe you want the industry to be nationalized?) Shareholder wealth is the public interst. Having your neighbors emloyed is the public interest. Tax revenue is the public interest. Pension funds and 401[[k)s are the public interest. Energy infrastructure is the public interest.

The commission is not going to drive the company out of business. In the meantime, the surcharge was applied for and approved. You had your chance to object but apparently it isn't enough of a concern to you to do anything more than bitch about it, after the fact, in the kiddie's pool of an online forum.

[rb336]

The corporate interst is the public interest. Having a viable business to provide an important product is the public interest. [[Or maybe you want the industry to be nationalized?) Shareholder wealth is the public interst. Having your neighbors emloyed is the public interest. Tax revenue is the public interest. Pension funds and 401[[k)s are the public interest. Energy infrastructure is the public interest.

The commission is not going to drive the company out of business. In the meantime, the surcharge was applied for and approved. You had your chance to object but apparently it isn't enough of a concern to you to do anything more than bitch about it, after the fact, in the kiddie's pool of an online forum.

outsourcing engineering jobs -- good for the public interest?
jacking up CEO salaries at the expense of workers, resulting in real wage decline for most Americans -- good for the public interest?

corporate interests CAN be in the public interest, but they are certainly NOT synonymous

Had our media been doing their jobs, instead of acting as the schills for the Corporate States of America, which they are, I would have protested it. you can't protest about something you don't know is going to happen. There was no announcement, no coverage in the press. regardless, the commission NEVER addresses public concerns. the commission appointees are FROM the industry they are supposedly watching, and they know on which side their bread is buttered

[MikeM]

you can't protest about something you don't know is going to happen. There was no announcement, no coverage in the press.

Ignorance is no excuse:

http://www.dleg.state.mi.us/mpsc/abo...e-listserv.htm

http://efile.mpsc.state.mi.us/efile/cases2.php?type=gas

http://efile.mpsc.state.mi.us/efile/docs/13898/0043.pdf

the commission appointees are FROM the industry they are supposedly watching, and they know on which side their bread is buttered

All Granholm appointees. I may have missed it but none appear to be from the industry nor even industry friendly. Maybe they interned there one summer:

Orjiakor N. Isiogu was appointed to serve as Chairman of the Michigan Public Service Commission by Governor Jennifer M. Granholm on September 9, 2007...

...
Prior to acting as Director of the Telecommunications Division, Mr. Isiogu was an Assistant Attorney General in the Special Litigation Division of the Michigan Attorney General's office where he served since 1989. The Special Litigation Division advocated on behalf of the Attorney General before the Michigan Public Service Commission, the Federal Communications Commission, and federal and state trial and appellate courts. While at the Attorney General's office, Mr. Isiogu worked under three Attorneys General and served on the Litigation Advisory Board. As an Assistant Attorney General, Mr. Isiogu represented the state, its agencies as well as the consumer interests in state and federal proceedings involving utilities such as natural gas, electric and telecommunications....


...Mr. Isiogu earned his law degree from Wayne State University Law School in Detroit, Michigan, and holds an undergraduate degree in political science from Wayne State University.

Monica Martinez was appointed by Governor Jennifer M. Granholm to the Michigan Public Service Commission on July 3, 2005...

...

Prior to her appointment to the Commission, Ms. Martinez served as the Deputy Director of the Governor's Legislative Affairs Division. Her career also includes positions in the Michigan Senate Democratic Office as a senior policy advisor where she specialized in telecommunications, energy, human services, and family law policy issues and at the Alumni Association of the University of Michigan and U of M Dearborn's Center for Corporate and Professional Development. Ms. Martinez earned a Bachelor's degree, majoring in Economics and Political Science, and a Master's in Business Administration with distinction, both from the University of Michigan.

Steven Transeth was appointed by Governor Jennifer M. Granholm to the Michigan Public Service Commission on July 16, 2007....

...For 21 years Commissioner Transeth served as Assistant Director and Legal Counsel for the non-partisan Michigan Legislative Service Bureau. Mr. Transeth was responsible for drafting legislation and providing legal counsel to the Michigan Senate and House of Representatives in the areas of energy, technology, public utilities, and local government. He served as the lead drafter for the following major pieces of legislation: Michigan Telecommunications Act, [[1991, 1995, 2000 and 2005), Customer Choice and Electricity Reliability Act, Uniform Video Services Local Franchise Act [[cable television), Michigan Child Protection Registry Act, Michigan Broadband Development Authority Act, Unsolicited Commercial E-Mail Protection Act, Michigan Zoning Enabling Act, and Emergency Telephone Services Act [[9-1-1).


Prior to his time with Michigan Legislature, Mr. Transeth was with the Ingham County Prosecuting Attorney's office for six years and in private practice for four years. Commissioner Transeth is a graduate of Thomas M. Cooley Law School and holds a master's degree and bachelor's degree from Michigan State University.

[Sstashmoo]

Oh Yeah MikeM we all have the MPSC website on our favorites and browse it daily.

There was zero coverage of this in the press, which would have been a huge story. Proves the press is controlled. Information and lack of to manipulate special interests.

Quote: "Don't allow MichCon to collect. Let them keep losing money and go out of business then go buy a wood stove and live like you're in Russia."

I could make my own electricity in a number of different ways and all are sustainable and practical unlike solar and wind. I think the big Corporate utilities have no compete clauses in their contracts that we all sign.

We can all thank Clinton for deregulating these cut throats like DTE. They have had a field day ever since. And also deregulating the financial sector as well.

[MikeM]

Oh Yeah MikeM we all have the MPSC website on our favorites and browse it daily.

Well, you could. You seem to have a lot of time to browse DetroitYes daily. Or, you could just subscribe and get an email when a new application is filed. Duh! Or better yet, you could have actually read your utility bill anytime during the past couple of years and noticed the line item surcharge. If it's such a big deal for you to have to pay a few extra dollars per year I would think you would be better informed and more active fighting it. Nope, instead you spend your hours here crying about it, and big business, and the media, and politicians, and the government, and unions, and China, and every other bogeyman:

Proves the press is controlled. Information and lack of to manipulate special interests.

We can all thank Clinton for deregulating these cut throats like DTE. They have had a field day ever since. And also deregulating the financial sector as well.

I see you have bigger issues than the topic at hand. Good luck with that anger. BTW, it was deregulated under Bush. [[DTE is a cut throat? I thought they were a boring old utility with lazy union workers coddled by big government.)

[ccbatson]

How would all of this shake out if government wasn't so involved? Ever have this kind of thing happen with a private company providing services and commodities? if you did, what would you do? More important than the specific answer, is that you have options and can fire the company doing wrong.

[Sstashmoo]

Quote: "Well, you could. You seem to have a lot of time to browse DetroitYes daily."

Yep, all day and all night if I want.


Quote: "Or, you could just subscribe and get an email when a new application is filed. Duh! Or better yet, you could have actually read your utility bill anytime during the past couple of years and noticed the line item surcharge. If it's such a big deal for you to have to pay a few extra dollars per year I would think you would be better informed and more active fighting it."

I shouldn't have to. I shouldn't have to worry about or spend time doing the research to see who is screwing me. That's why these entities should be regulated, just as we now have learned the mortgage industry needs as well. Your attitude is if we can screw the people and get away with it, that's ok. It isn't. It's unethical and unfair.

Quote: "BTW, it was deregulated under Bush."

It was started by Clinton.

[MikeM]

How would all of this shake out if government wasn't so involved?

I suppose MichCon would be free to refuse service to those with poor/no credit. Remaining losses could be made up with higher rates. Overall rates might be lower, they probably would go higher. The poor would have to resort to other means for heating. Rb336 would post here about how terrible it is that rates are too high and hundreds of poor people freeze each year, and that the government should do something about it.

It was started by Clinton.

It was really started by Carter in 1978, expanded by Reagan, and finished by George H.W. Bush in 1992.

[rb336]

How would all of this shake out if government wasn't so involved? Ever have this kind of thing happen with a private company providing services and commodities? if you did, what would you do? More important than the specific answer, is that you have options and can fire the company doing wrong.

go on over to one of those places that does consumer satisfaction surveys [[like the one I posted on the old forum under a similar discussion). government/community owned utilities are near the top in consumer satisfaction