PSC Approves Discount In Reservation Charge Applicable To Retail Suppliers, Versus Default Service Customer Charge (Unique, Lower Charge For Shopping Customers)

The Michigan PSC has adopted dual natural gas pipeline reservation charges at DTE Gas, with a unique (reduced) reservation charge applicable to gas customer choice (GCC) customers of retail suppliers, and another reservation charge amount applicable to default service (GCR) customers.

The dual reservation charges reflect that shopping customers receive fewer benefits from capacity held by DTE versus non-shopping GCR customers. Currently, a uniform reservation charge applies to all customers.

The dual reservation charge was proposed by the Retail Energy Supply Association, which had argued that GCR customers received more benefits from the pipeline capacity paid for under the reservation charge than GCC customers.

The main benefit of holding pipeline capacity, RESA said, is the ability to transport natural gas from point A to point B through the pipeline. Delivering supply from point A to point B allows DTE to capture a market spread value between the two points on the pipeline, which ultimately lowers the average supply cost for GCR customers, RESA noted. Currently, DTE utilizes the pipeline assets it retains to transport gas for GCR customers to DTE's city-gate. Conversely, retail suppliers are responsible for delivering the gas to the city-gate for GCC customers and thus GCC customers do not receive those same reduced supply costs from the capacity assets, RESA noted.

"The Commission agrees with RESA’s initial premise that GCR customers benefit from gas commodity cost savings that are not available to GCC customers thus placing GCC customers at a relative disadvantage," the PSC said in an order adopting the dual reservation charges

"The Commission also agrees with RESA that the pipeline spread value resulting in gas commodity cost savings for GCR customers is separate from midstream revenues from arbitrage activity of buying gas at a lower price and selling it at a higher price. The Commission approves of RESA’s proposal, which amounts to a discount for GCC customers of 30% of the reservation charge. The GCR customers will be responsible for the balance of the reservation charges " the PSC said

In the case, DTE had proposed a pipeline reservation charge of $0.29 per thousand cubic feet (Mcf) to be billed to both GCR and GCC customers.

Case No. U-17691