We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Energy

Monday, May 19, 2008

Integrys Energy Group, Inc. Subsidiary Files Natural Gas Rate Case in Michigan

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Comtex

CHICAGO, May 19, 2008 /PRNewswire-FirstCall via COMTEX/ ----Integrys Energy Group, Inc. (NYSE: TEG) announced today that its subsidiary, Michigan Gas Utilities Corporation, has filed a rate case with the Michigan Public Service Commission, the first delivery rate increase request since 2003. Michigan Gas Utilities applied for an overall increase of 5.8 percent in retail natural gas delivery rates, which, if approved as requested, would result in a monthly increase of about $6 for the typical residential customer using 92 thousand cubic feet annually.

Additionally, Michigan Gas Utilities is asking for a 4.4 percent interim rate increase, subject to refund, while the Michigan Public Service Commission considers the request.

Michigan Gas Utilities' rate case filing includes an increase in its base rates of $13.9 million in annual revenue, a rate base of $204 million, a return on common equity of 11.25 percent, and an equity component of 50.01 percent.

In March 2003, Michigan Gas Utilities was granted 44.89 percent regulatory equity and an 11.4 percent allowed return on common equity. Michigan Gas Utilities' return on equity for the year ended December 31, 2007, was 4.97 percent.

"Due to inflation, our costs have risen over the past five years, so we need this increase to recover those increased costs," said Michigan Gas Utilities President Gary Erickson. "Natural gas commodity prices continue to be volatile and current indications are that prices could be higher next winter. Michigan Gas Utilities does not profit from the price of the natural gas commodity. We simply pass the cost of the natural gas commodity through to our customers, under the oversight of the Michigan Public Service Commission."

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they do not relate strictly to historical or current facts and often include words such as "anticipate," "expect," "intend," and other similar words. Forward-looking statements are beyond the ability of Integrys Energy Group to control and, in many cases, Integrys Energy Group cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. Please see Integrys Energy Group's periodic reports filed with the Securities and Exchange Commission (including its 10-K and 10-Qs) for a listing of certain factors that could cause actual results to differ materially from those contained in forward-looking statements.

About Integrys Energy Group, Inc.

Integrys Energy Group, Inc. (NYSE: TEG), headquartered in Chicago, Illinois, is a holding company for energy related subsidiaries, which includes regulated utilities and nonregulated subsidiaries.

 The six regulated utilities
   consist of: -- The Peoples Gas Light and Coke Company, a natural gas utility serving approximately 830,000 customers in the
   City of Chicago. -- Wisconsin Public Service Corporation, an electric and natural gas utility serving approximately 433,000
   electric customers and 314,000 natural gas customers in northeastern Wisconsin and an adjacent portion of Michigan's Upper
   Peninsula. -- Minnesota Energy Resources Corporation, a natural gas utility serving approximately 207,000 customers throughout
   Minnesota. -- Michigan Gas Utilities Corporation, a natural gas utility serving approximately 165,000 customers in lower Michigan.
   -- North Shore Gas Company, a natural gas utility serving approximately 158,000 customers in the northern suburbs of Chicago.
   -- Upper Peninsula Power Company, an electric utility serving approximately 52,000 customers in Michigan's Upper Peninsula.
   The company's principal nonregulated subsidiary is: -- Integrys Energy Services, Inc., a diversified nonregulated energy supply
   and services company serving residential, commercial, industrial, and wholesale customers in developed competitive markets
   in the United States and Canada.

More information about Integrys Energy Group, Inc. is available online at http://www.integrysgroup.com.

SOURCE Integrys Energy Group, Inc.

http://www.integrysgroup.com/

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