June 29th, 2022: Earlier this month, Sierra Club and our allies in Michigan secured a settlement in Consumers Energy’s gas rate case steering investment away from the gas system and towards electrification.
As part of its request to the Michigan Public Service Commission for approval of a gas rate increase, Consumers had proposed to saddle customers with the cost of building a so-called “renewable” natural gas (RNG) facility that would source methane from a dairy feedlot in Western Michigan and to continue the subsidization of extending its gas distribution system via line extension allowances (LEAs). Sierra Club, Michigan Environmental Council, and NRDC intervened and challenged the cost-benefit analysis that Consumers offered as justification of the RNG project. We also challenged the structure of the company’s LEAs–which incentivize the buildout of gas infrastructure at the expense of electrification–by showing that, contrary to Consumers’ claims, gas demand is not likely to increase in years to come.
In the settlement, Consumers agreed to lower its rate increase by $100 million, eliminating investments that would lock in polluting gas for decades. The RNG project will not be approved, and Consumers agreed to review and update the assumptions that inform its line extension model and to transition to a new, more transparent model by the end of 2022. Looking forward, we’re confident that including accurate gas demand projections in the model will eliminate the justification for the subsidy. In addition, Consumers agreed to support a decarbonization pathways analysis by the State, to meet regularly with our coalition to identify policies to push for to achieve net-zero emissions by 2045, and to include performance metrics in its Natural Gas Delivery Plan.
Appreciation for the excellent work on this case by Nihal Shrinath, Bridget Lee, and Elena Saxonhouse of the Club’s Environmental Law Program, our partners at MEC and NRDC, and legal team at Olson, Bzdok & Howard, P.C.