The Michigan Public Service Commission (PSC) has rejected a proposal by Michigan Gas Utilities, a local distribution company (LDC), to implement a 70/30 sharing mechanism for capacity-release revenue. (The LDC currently credits all such revenues to its customers through a gas-cost recovery mechanism.)
The PSC found the LDC's incentive plan lacking in safeguards to ensure that the company does not earn a windfall profit at the expense of ratepayers. It explained that a proper incentive would place the company at risk for a percentage of any shortfall in actual capacity-release credits. It added that the plan grants the LDC a 30-percent credit "without regard to whether the capacity-release revenues are generated as a result of innovative or routine efforts." Re Michigan Gas Utilities, Case No. U-10982, Sept. 12, 1996 (Mich.P.S.C.).
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