Detroit Edison Co. (DE) has received approval from the Michigan Public Service Commission for
10-year sole-supplier contracts for electric power and related services with Chrysler, Ford, and General Motors. (Case No.
U-10646). DE is believed to be the first utility in the nation to secure such agreements for an entire industry in its service territory
The almost identical contracts involve a
1,000-megawatt combination of firm and interruptible power, giving rate discounts to the automakers. A phase-out provision reduces the load each customer is required to purchase from the utility by
20-percent increments each year, from 2001 until contract termination at the end of 2004. If a customer exercises its option to phase out its purchases and look elsewhere, it may do so only by disconnecting its entire load for a given location. Load may be reduced at any time if the customer disconnects equipment or implements energy-efficiency measures.
The service requires that at least 85 percent of peak demand (the highest 30-minute, noncoincident demand registered during the previous 12 months) be served by firm power at the beginning of the contract. Surcharges for demand-side management, nuclear decommissioning, and conservation are attached for firm and interruptible sales through 1999, after which the surcharges revert to tariff levels.
DE will receive about $2 billion in revenue over the life of the contracts. At today's prices, the discounts will amount to between $30 and $50 million annually through 2004. DE expects to offset the revenue losses by reducing operating expenses.
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