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We all plan for the future – to maintain our homes and businesses, and to provide for our families. MichCon is no different; we plan in order to maintain safe, reliable delivery of energy, enabling you to heat your home, cook your food, and enjoy all the other conveniences of natural gas. When energy delivery costs rise, we need to adjust our prices to continue to provide natural gas to our customers.


Since our rates are regulated through the Michigan Public Service Commission, we file “rate cases” before the commission to ensure that our rates are fair and reasonable. In January, MichCon customers will notice a surcharge on bills called “U-15985,” to implement an increase in its base distribution rates. This is the first rate case MichCon has filed in five years. These charges cover the increased cost of delivering natural gas to homes and businesses, maintaining the distribution system, and providing customer service and repairs. While this surcharge is an increase, it will be offset by the removal of another surcharge and a decrease in the Gas Cost Recovery rate (see explanation below for definitions of these terms). The good news is that even with the proposed increase, the average heating bill for MichCon customers this winter will be about $11 a month lower than last winter – and about 20 percent below 2005 levels – the last time a base rate increase was implemented.


MichCon’s investment in energy efficiency programs – and the response of our customers – is paying off as customers, on average, are using less natural gas. DTE Energy provides many ways for you to manage your energy costs at YourEnergySavings.com. Check it out for tips, information and incentives to help you save energy and save money.

 

Natural Gas Rates

Natural Gas Rates for residential and business customers who purchase their gas from MichCon have three components:

  1. Customer Service Charge - A fixed "non-gas" monthly charge that varies by type of service. It is for repairing leaks and administering billing.
  2. Gas Distribution Charge - The charge to transport gas across MichCon's system for delivery to your home or business, including pipeline maintenance and gas storage. This is also a "non-gas" component and is dependent on the amount of gas you use during the month. The Distribution Charge rate on your bill is stated in $ per Ccf (hundred cubic feet). Note: effective Jan. 1, 2007 an Uncollectibles Surcharge was assessed to allow us to recover costs resulting from uncollectible debt expenses incurred during 2005.
  3. Gas Cost Recovery (GCR) - The gas or commodity component, or the price you pay for natural gas itself, in $ per Ccf. The GCR rate is based on costs incurred by MichCon to purchase gas supply. It is the same price we pay. By law, we do not make a profit on the sale of natural gas. The GCR rate is approved by Michigan Public Service Commission (MPSC). Our revenues are derived from Customer Service and Distribution charges.

If you participate in the Gas Customer Choice (GCC) program, the gas component on your bill is represented by the GCC supplier charge. MichCon simply bills for this charge, collects payment and reimburses the GCC supplier. Gas Customer Choice customers should contact their alternative gas supplier with questions about their cost of gas.

 

Current Gas Rates

Because the Gas Cost Recovery (GCR) Rate can fluctuate on a monthly basis, the most current listing of gas rate and options can be found in this Rate Summary document. (pdf)

 

Gas Cost Recovery (GCR) Rate

The Gas Cost Recovery rate can change monthly and is the largest portion of a typical heating bill.


dollar chart
* Based on a five-year average residential heating bill

 

The Gas Cost Recovery (GCR) rate changed from $0.660 per hundred cubic feet (Ccf) to $0.685 per hundred cubic feet (Ccf). The increase was implemented on a bills rendered basis beginning the first billing cycle in June 2010.

We evaluate the GCR factor every month to reflect the cost we expect to pay our suppliers. Once actual gas supply costs are booked, any cost adjustments over or under are factored into the GCR factor - an ongoing "true-up" process resulting in no profit to us. By law, the GCR factor is passed on to customers without any profit or markup. Customers pay what we pay for natural gas. The Michigan Public Service Commission reviews and approves the price we charge for gas.

 

Gas Supply Cost Factors

Like many other commodities, the price of natural gas is impacted by supply and demand.  Weather conditions have an impact.  Extreme or lengthy winters raise demand. Severe weather conditions, like hurricanes, can diminish natural gas production and impact supply.  All of these conditions factor in to the GCR rate.

MichCon does its best to cushion the impact of gas prices on our customers. We purchase and store large quantities of natural gas in the summer. This enables us to take advantage of seasonal pricing, when possible, and acquire gas when demand is lower. Because of this strategy, our gas costs are below the national average.

Natural gas continues to remain a good value when compared with other fossil fuels such as propane and heating oil, which have also gone up in price.