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Choice State PSC Orders Utility To Evaluate Benefits Of Fixed Price Hedging & Alternatives For Gas Supply, After AG Opposed Current Fixed Price Premiums In Supply Rate
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The Michigan PSC will allow DTE Gas Company to continue with its existing Volume Cost Average fixed price program (VCA FPP) for the bypassable gas cost recovery rate (supply rate), but ordered DTE Gas to evaluate the benefits of the current mechanism, and potential alternatives, in light of objections to the program from the Michigan Department of Attorney General due to premiums included in gas supply rates
The PSC's direction came in an order on DTE Gas's gas cost recovery plan and gas cost recovery factors for the 12-month period ending March 31, 2026
The PSC found that the, "VCA
FPP and purchasing strategy are reasonable and prudent in providing price stability to its
customers in the current matter and should thus be approved."
However, the PSC ordered DTE Gas, "to evaluate the stability benefits of the VCA program, and alternatives thereto, with the
overall cost to its customers to determine whether improvements to better balance the benefits and
costs of the hedging program are necessary in future GCR proceedings."
The PSC further ordered, "Beginning with the company’s next gas cost recovery plan, DTE Gas Company shall
evaluate the stability benefits of its volume cost average program, and alternatives thereto, with the
overall cost to its customers to determine whether improvements to better balance the benefits and
costs of the hedging program are necessary as described in this order."
During the proceeding, the AG had alleged that DTE Gas’s current fixed-price gas purchase program, "is extremely costly and provides marginal reductions in cost of gas variability from
to [sic] month to month and year to year versus other programs."
The AG had recommended that the current VCA
program should be restructured and moderated to reduce the percentage of supply
purchased at fixed prices from 75% to 40%. The AG also said that DTE Gas should reduce the
purchase window for fixed-price gas supply for the upcoming GCR year from
39 months to 25 months prior to delivery of the gas supply.
The AG argued that these changes could reduce the cost of the current VCA program by nearly half
As described by the AG, DTE under the current VCA mechanism begins to purchase gas supply at fixed-prices between
27 and 39 months prior to delivery of the gas supply. The purchases are made over
a 24-month period and conclude up to three months before the start of the planned
GCR year. By dividing 75% over 24 months, DTE Gas purchases
approximately 3% of the planned supply of each future month over the preceding
27 to 39 months, the AG said
The AG had alleged that under the VCA program, DTE Gas
has increased gas costs to customers over an FOM [first of month] Index method by a cumulative amount of
$763.9 million from April 2010 to March 2024.
DTE Gas said during the case that the VCA reduced
volatility from 38% under the FOM Index Method to 14% under
the VCA Method
In the GCR plan, DTE also had initially proposed to include premiums from responsibly
sourced gas (RSG) in the GCR rate, but later withdrew the proposal. The PSC has previously said that responsibly
sourced gas premiums may not be recovered in GCR reconciliation proceedings absent further evidence of any benefits to customers versus the cost of the premium for RSG
Under the PSC's order, DTE Gas Company is authorized to implement a maximum gas cost recovery factor of
$3.84 per thousand cubic feet, which may be adjusted consistent with a simplified contingent
factor mechanism set forth in tariff
DTE Gas Company is also authorized to include a supplier of last resort charge of $0.36 per
thousand cubic feet for gas cost recovery customers and a reservation charge of $0.24 per thousand
cubic feet for gas customer choice customers
Case U-21608
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April 20, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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