Michigan PSC Denies Rate Refund to Customers Who Have Left Bundled Service at Detroit
Edison
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December 27, 2010
In a recent ruling regarding a refund of self-implemented rates at Detroit Edison,
the Michigan PSC held that refunds need only be paid to customers currently taking
bundled service, and not customers who took bundled service during the period of
over-charges, but have since switched to retail open access (ROA).
The PSC directed Detroit Edison to refund nearly $26.9 million to customers due to
the over-collection of self-implemented rates in Case No. U-15768. The Commission
approved the use of the Power Supply Cost Recovery (PSCR) reconciliation proceeding
as a mechanism to complete the refund.
Under the self-implemented rates, not all rate classes were over-charged.
For example, the D-6 primary retail open access (ROA) class paid $2.1 million less
under self-implemented rates than would have been required under final rates, and
the D-3 secondary ROA class paid $1.5 million less under self-implemented rates than
would have been required under final rates.
The Association of Businesses Advocating Tariff Equity argued that customers who
paid the higher self-implemented rates under a bundled rate class during the self-implementation
period, but who have since moved to retail access (whose classes will not be receiving
a refund) should receive a refund reflecting what these customers actually overpaid
when on bundled service.
The Commission denied this request, finding that the refund must be allocated based
on the pro rata share of the revenue from the self-implemented increase, not on the
precise dollar amount paid in excess revenue. "[T]hus, ABATE's argument in favor
of a refund that reflects what each primary customer 'actually paid' is inconsistent
with the language of the statute," the PSC said.
"The Commission does not agree with ABATE that primary customers who chose to switch
from bundled to choice service during the period of self-implementation are treated
unfairly ... There was nothing hidden from such customers. The possibility that
the rate increase adopted in the final order would differ from the unapproved rate
increase self-implemented by the company was always present, as was the possibility
that the final rate design would differ, however slightly, from the self-implemented
rate design. Such customers would have (or should have) been aware of that fact
at the point in time when they decided to switch. Indeed, any customer who made
that switch early in the self-implementation period likely underpaid during the self-implementation
period, since only one ROA rate schedule overpaid during self-implementation," the
Commission held.
The refund proceeding was docketed as U-16384.
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