I keep hearing my high bill blamed on increasing PSCR. What does that mean?
Are you even a utility if you don’t speak in acronyms? IDK. See what I did there? Anyway… this is a great question. We did a blog earlier in the winter about the many reasons for higher bills this winter, and the Power Supply Cost Recovery (PSCR) charge is one of those reasons. So, let’s dive in.
Simply put, the PSCR is the cost to recover what we pay for generating, purchasing and moving electricity over high voltage transmission lines, including fuel costs. This is referred to as a pass-through cost, which means you pay what we pay. The cost is directly related to the electricity you use, which is measured in kilowatt-hours (kWh), there is no mark-up to the cost that the company benefits from.
The costs associated with PSCR have increased over the last year, primarily from the spike in natural gas prices. For most of 2022, we absorbed the increased costs to lessen the impact on our customers during challenging economic times. But as a publicly traded energy company, we must consider the entire financial picture as we work to serve customers and communities and care for our co-workers. With that in mind, we requested and received Michigan Public Service Commission (MPSC) approval to increase the PSCR factor to a maximum of 2.7 cents/kWh. This increase will allow for us to recover power supply costs from 2022 and cover the continued high natural gas prices in 2023. Again, this is just covering the cost we paid and will continue to pay, it doesn’t result in a profit for the company.
Like most businesses, we start each year with a plan, which includes projected costs. And a budget based on those costs. But, as we’ve seen the last couple years – things can change, beyond our control- like a pandemic and inflation. And when that happens, we try our best to find a solution that works for our customers, company and co-workers.
Unlike many businesses, we are regulated, which means we must get approval from the MPSC before we make a change to our rates. And when that change is approved you will most likely see it in the newspaper and on the local newscast. So, while you are probably paying more for most of your goods and services compared to a year or two ago, they aren’t regulated and don’t need approval before they raise their rates, which means no nightly news highlight. You’re not going to read a headline about your local department store charging a certain percentage more. Well, unless it’s eggs. That is making for EGGcellent headlines and social media fodder right now.
Okay, back to PSCR. We know this increase may cause a hardship for some of our customers, which is why we are reminding customers that assistance programs are available to help pay your bills this winter. Check out this blog to learn how to get assistance this winter.
As mentioned earlier, the PSCR is based on amount of electricity you use. So, if you can find ways to use less electricity, your bill will reflect that. Check out these blogs for some ideas on how to winterize your home and cut back usage without sacrificing comfort.
So when will the costs go back down? The unhelpful but truthful answer is…we don’t know. Future costs will depend largely on the fluctuation of natural gas prices, which provides fuel for much of the electricity we generate and purchase for customers. We are committed to managing the costs within our control and working with the MPSC to explore new and innovative solutions to support our customers. In fact, we received approval from the MPSC to extend the recovery of the 2022 costs over three years instead of impacting customers at once. This will provide significant relief for the homes and businesses we serve, including our most vulnerable customers.
We will continue to operate our generation fleet in a reliable manner and continue to avoid purchasing higher priced energy from the market. And we encourage our customers to take steps to make changes within their control to lower usage and costs. From using energy at off-peak times to taking advantage of rebates and energy assessments, we have tools to help customers save energy and money at ConsumersEnergy.com/change.
And as always, if you need to set up payment arrangements or find other assistance options for paying your bill, call us at 800-477-5050.