Follow the quick links below or scroll down this page to learn more about how gas rates are set.
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Rate Components on your Bill
Rates for residential and non-residential customers who purchase their gas from MichCon have three components:
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Customer Charge - A fixed "non-gas" monthly charge that varies by type of service. It is for repairing leaks and administering billing.
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Gas Distribution Charge - The charge to transport gas across MichCon's system for delivery to your home or business, including pipeline maintenance and gas storage. This is also a "non-gas" component and is dependent on the amount of gas you use during the month. The Distribution Charge rate on your bill is stated in $ per Ccf (hundred cubic feet). Note: effective Jan. 1, 2007 an Uncollectibles Surcharge will be assessed to allow MichCon to recover costs resulting from uncollectible debt expenses incurred during 2005.
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Gas Cost Recovery (GCR) - The gas or commodity component, or the price you pay for natural gas itself, in $ per Ccf. The GCR rate is based on costs incurred by MichCon to purchase gas supply. It is the same price we pay. By law, MichCon does not make a profit on the sale of natural gas and the GCR rate is approved by Michigan Public Service Commission (MPSC). MichCon's revenues are derived from Customer Service and Distribution charges.
The GCR rate can change monthly and is the largest portion of a typical heating bill.
* Based on a five-year average residential heating bill
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 Customer Choice customers should contact their alternative gas supplier with questions about their cost of gas.
Gas Cost Recovery (GCR) Rate
The Gas Cost Recovery (GCR) rate changed from $1.076 per hundred cubic feet (Ccf) to $1.136 per hundred cubic feet (Ccf). The increase was implemented on a bills rendered basis beginning the first billing cycle in September 2008.
MichCon evaluates the GCR factor every month to reflect the cost it expects to pay its 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 MichCon. By law, the GCR factor is passed on to customers without any profit or markup. Customers pay what MichCon pays for natural gas. The Michigan Public Service Commission reviews and approves the price MichCon charges for gas.
Our rates are posted online. We update this Web content each time the GCR changes. See our Natural Gas Rate Summary* page for current rate information.
Gas Supply Cost Factors
- Higher demand has increased pressure on wholesale natural gas prices and forced MichCon to increase its GCR rate. However, changing weather patterns could change market conditions rapidly.
- MichCon does its best to cushion the impact of gas prices on 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, MichCon's gas costs are below the national average.
- The largest portion of your heating bill is for the natural gas itself, which is described as the Gas Cost Recovery (GCR) item on your bill. By law, the GCR is passed on to customers without profit or markup to MichCon. The Michigan Public Service Commission reviews and approves the price MichCon charges for gas.
- Natural gas remains a good value when compared with other fossil fuels such as propane and heating oil, which have also gone up in price.
Frequently Asked Questions
You say that MichCon does not make a profit on the cost of gas, but we find it hard to believe. How does MichCon stay in business?
Here is a statement directly from the Michigan Public Service Commission: "Under law, Michigan's natural gas utilities are able to recover the cost of the natural gas they purchase, however without a mark-up for profit." Revenues for utilities such as MichCon are derived from service and distribution charges. Higher natural gas prices reduce our revenue because it encourages customers to use less gas through conservation.
Can I purchase my gas from another supplier?
You may opt to purchase your gas from an alternative gas supplier through our Gas Customer Choice program.
Why am I being charged for MichCon's uncollectible expenses? I pay my bill on time.
The surcharge spreads the costs incurred to provide service to all MichCon customers. The surcharge amount will vary per customer based on 1) the amount of the gas service rendered (per Ccf), and 2) the customer's billing classification (residential, commercial, or industrial).
This surcharge was authorized by the MPSC under the Uncollectible Expense True-up Mechanism (UTEM) Filing- Case No. U-13898. Customers may visit their website at www.michigan.gov/mpsc for additional information.
How can I reduce my energy bills?
Use the Energy Savings page to locate helpful seasonal tips and videos and to access MyEnergy Analyzer. MyEnergy Analyzer is an interactive tool that helps you analyze your personal energy use and find ways to reduce your energy costs each month. You'll also find information on our Rebate programs and a directory for suppliers of energy efficiency products and services.
What programs does MichCon have to help customers with their bills?
Customers may qualify for the BudgetWise® Billing plan, which spreads energy costs evenly over the entire year - this will be especially helpful when the winter heating season approaches. Payment assistance programs are also available for our low income customers.
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