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Residential Rate Update
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, so that you can enjoy all the conveniences that natural gas provides. 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. On June 3, 2010, the MPSC approved MichCon’s request in Case #U-15985 to increase our base distribution rate and customer charge. This is the first rate case MichCon has filed in five years.
Although this increase means you’ll pay more to deliver natural gas to your home or business, it is offset by the removal of the U-15985 IS surcharge. The good news is that, even with this increase, the average heating bill for MichCon customers for the winter of 2010-2011 will be about $7 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. We provide many ways to help you manage your energy costs at YourEnergySavings.com. Check it out for advice and incentives to help you save energy and save money.
Under the new rates, here’s what a typical MichCon bill will look like based on 100 CCF of gas used and a 30-day billing period.
| Sample Bill: MichCon Residential Rate | ||
| Customer Charge | $ 10.50 | |
| Gas Distribution Charge | 100 CCF @ 0.23184 | $ 23.18 |
| 2008 U-13898 UETM Surcharge | 100 CCF @ 0.0348 | $ 3.48 |
| Energy Optimization | 100 CCF @ 0.0201 | $ 2.01 |
| Gas Cost Recovery | 100 CCF @ 0.685 | $ 68.50 |
Note: If your 30-day billing period extends over a May – June time frame, the portion of your billing period prior to June 3, 2010, will be billed at the rates in effect at that time. View a sample of a split bill.
We measure and sell natural gas to our customers by measuring the volume in cubic feet. One cubic foot of natural gas would fit in a cube, 12 inches square and 12 inches high. For ease in billing, we measure and price gas in units of 100 cubic feet or CCF, which is the unit of measure you see on your natural gas bill. If you use 1,000 cubic feet of natural gas in a billing period, you will actually see your usage as 100 CCF on your bill.
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 *.
What do the charges on my MichCon bill mean?
The Natural Gas Rates that appear on your monthly bill have five main components:
| Customer Charge: | A fixed “non-gas” monthly charge that varies by type of service. It covers the cost to provide safe, reliable gas service to our customers. It includes the cost to maintain and read meters, maintain the natural gas distribution system and administering billing. |
| Gas Distribution Charge: | The price to deliver the natural gas you use to your home or business. This charge is based on the amount of gas you use during the billing period. |
| Gas Cost Recovery (GCR): |
The price you pay for the natural gas that you used. The GCR rate can change monthly and is the largest portion of a typical heating bill. It’s based on costs incurred by MichCon to purchase gas supply and is the same price we pay. Learn more about this charge below. Note: 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 choice customers should contact their alternative gas supplier with questions about their cost of gas. |
| 2008 U-13898 UETM Surcharge: |
A surcharge that allows MichCon to recover costs from uncollectible debt expense incurred in 2008. This surcharge is based on the amount of gas you use during the billing period. |
| Energy Optimization: |
A surcharge that allows MichCon to develop and offer an Energy Optimization program that provides rebates, incentives and energy efficiency education to our customers. This surcharge is based on the amount of gas you use during the billing period. |
What you pay
The Gas Cost Recovery rate can change monthly and is the largest portion of a typical heating bill.
* Based on a five-year average residential heating bill
The Gas Cost Recovery (GCR) rate changed from $ per hundred cubic feet (Ccf) to $ per hundred cubic feet (Ccf). The difference was implemented on a bills rendered basis beginning the first billing cycle in firstMonth.
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 -- a good value
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.
This chart compares the cost of natural gas to the cost of propane and oil on an equivalent heat value basis for the winter heating season of September 2009 - March 2010. Natural gas provides the best value for your heating dollar.
* To view and print this information, you need Adobe® Acrobat® Reader.
