Energy Central-News Article

Jan. 1—Customers of DTE Energy Co.'s gas service will see a bump in their bills this month after the Michigan Public Service Commission approved an $84.1 million rate increase for DTE Gas Co. While that's not welcome news for homeowners and business operators, the utility says most of the additional revenue will go toward modernizing its gas delivery network — a long-term benefit for customers.

The rate hike will cost a residential customer using 100 cubic feet of natural gas each month an extra $3.18. The subsidiary of DTE Energy serves about 1.3 million customers in southeast Michigan.

The rate increase includes $38 million the commission previously approved for an infrastructure surcharge, said Dan Brudzynski, vice president at DTE Gas.

He likened the utility's upgrade program to the $1 trillion, 10-year infrastructure bill that President Joe Biden signed in November.

"We've been on a multiple-decade now march on modernizing the gas infrastructure," Brudzynski said. "These are the pipes and moving meters out of houses. We're upgrading our infrastructure very similar to what hopefully will happen soon with the infrastructure package that was passed in Washington around roads and bridges. We've been doing it on the electric side and we've been doing it on the gas side."

The modernization program, to run through the mid-2030s, will replace old cast iron or bare steel main pipes with high-density polypropylene plastic.

This year's work will include replacing 200 miles of natural gas pipe in 16 communities throughout the state, something the utility says will reduce greenhouse gas emissions.

"This is going to improve reliability. ... It will eliminate leaks, which is great for the environment," Brudzynski said. "It will help us reduce operating costs in the future."

The utility last year requested a $195 million increase, or 11%, to fund operations and maintenance, invest in information technology and compensate for lower predicted sales. Michigan Attorney General Dana Nessel criticized the original request, saying a 2% increase was reasonable to keep natural gas prices affordable.

The Michigan Public Service Commission approved less than half of DTE's requested hike last month, garnering praise from the attorney general.

"Although it still represents a significant rise in customer rates, it keeps that increase to less than 4% while still providing DTE Gas with added revenue to continue to improve its infrastructure and customer experience," Nessel said in a statement.

Amy Bandyk, executive director of the nonprofit Citizens Utility Board of Michigan, said she also found the latest increase to be fair.

"It was a reasonable outcome," she said. "The return on investment was kept unchanged. Significant cost efficiencies were proposed and adopted, and the pace of reinvestment in distribution pipes was held steady."

Bandyk said the increase is largely a continuation of past practices. Besides paying for infrastructure upgrades, the additional funds will cover operations and maintenance and compensate for projected lower sales, officials said.

DTE's natural gas sales have gradually dropped due to an increase in energy efficiency with programmable thermostats and more efficient water heaters and gas furnaces, Brudzynski said.

During the pandemic, usage by the utility's commercial customers has fallen as arts and entertainment venues host fewer events and businesses reduce their hours.

While customers will see a bump in their gas delivery charge with the latest rate increase, DTE says it's been offset the past quarter by nearly $20 in monthly savings for customers because the utility has bought natural gas at lower rates and stored it. Purchase rates were $2.83 per cubic foot but have risen to $3.50-$4, Brudzynski said.

"If cold weather comes, we expect the price for the commodity to go up," he said. "Basically, it's a pass-through for customers. We don't mark it up. That amounts to pretty close to $20 a month that customers have already been seeing in October, November, December, and they will continue to see through the rest of this winter."

DTE has locked in 75% of its natural gas supply for next winter, Brudynski said: "If prices continue to be strong even for next winter, there's going to be savings for customers as well."

cwilliams@detroitnews.com

Twitter: @CWilliams_DN

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