LDC Must Offer Contiguous Billing, Absorb Special Discounts

The Michigan Public Service Commission (PSC) has reaffirmed an earlier decision requiring Consumers Power Co., a natural gas local distribution company (LDC), to absorb revenue losses associated with special discounts granted to large transportation customers under contracts and tariffs approved by the PSC. While directing the LDC to reduce base gas rates by $11.73 million, the PSC ruled that Consumers had failed to prove that the discounts were justified by cost of service or that the load-retention aspects of the discounts conferred a general benefit on ratepayers. (See, Re Consumers Power Co., 167 PUR4th 461 (Mich.P.S.C. 1996).) On rehearing, the PSC rejected allegations by Consumers that the policy on discounts would impede competition and economic development in the state. The PSC also reaffirmed its support for the "reasonable and prudent" use of rate discounts provided that the public interest is protected by adequate safeguards.