Michigan Energy Package One Year Anniversary

Part of NRDC's Year-End Series Reviewing 2017 Energy & Climate Developments

It’s been one year since the Michigan legislature came together to support a vision for an affordable, reliable, and clean energy future. To celebrate PA 341 and PA 342’s anniversary and recap what has felt like Christmas year round, I give you the Twelve Months of Christmas—Michigan Energy Edition.

On the Twelfth month of Christmas,

the Commission sent to me:

Twelve Billion Dollars

In August, Consumers Energy and DTE Energy coordinated to assess Michigan’s electric energy efficiency potential for the next ten to twenty years. The study showed that from 2017 to 2036 readily achievable energy efficiency programs could bring nearly twelve (11.9) billion dollars worth of benefits to families in Michigan.

Eleven Groups Engaging

The Commission enlisted experts to present on the crucial benefits of stakeholder engagement. Eleven groups interested in engaging include other utilities, environmental groups, consumer advocates, consumer interest groups, renewable advocates, the attorney general, vendors, commercial groups, industrial groups, large businesses, and affected communities. Their inclusion assists in:

• Educating stakeholders on utility plans
• Improving transparency of utility decision making process for resource planning
• Creating opportunities to provide feedback to the utility on its resource plan
• Encouraging robust and informed dialogue on resource decisions
• Reducing utility regulatory risk by building understanding and support for utility resource decisions. 

Tens of Thousands Tests

Integrated resource plans or long term energy planning must address the reality of an uncertain future. Luckily, methods and models exist to prepare us for different types of uncertainty and ensure we manage our risk appropriately. Stochastic risk analysis models test tens of thousands of alternative resource strategies against hundreds of different futures until they come up with resource strategies with the lowest cost for each level of risk.

Nine New Tasks

Michigan’s energy laws are updating everything from energy efficiency levels to long term planning requirements. To properly carry out these updates, the Commission developed nine buckets of implementation tasks:

1. Rate Case and Certificate of Necessity
2. Integrated Resource Planning Process
3. Resource Adequacy
4. Electric Choice
5. Renewable Energy
6. Distributed Generation
7. Energy Waste Reduction
8. Demand Response
9. Other items (PURPA, Performance based regulation, and code of conduct/value-added programs).

Eight Workgroups Working

The law required the Commission with input from the Michigan Agency for Energy, Michigan Department of Environmental Quality, and other interested parties to set modeling parameters and assumptions for utilities to use in filing integrated resource plans. To address the requirements eight workgroups were formed:

1. Energy Waste Reduction
2. Demand Response
3. Environmental Policy
4. Renewables and PURPA
5. Forecasting, Fuel Prices and Reliability
6. Transmission
7. Other Market Options and Advanced Technologies
8. Upper Peninsula

Stakeholders were invited to participate in and assist with leading meetings from late March to mid-June. On June 19, each workgroup submitted recommendations to the Staff for potential inclusion into the draft strawman proposal to guide integrated resource planning process.

Seven Tariff Talks

The distributed generation workgroup met seven times with the final meeting held December 19, 2017.  Cost of service considerations and development of the tariff were the primary areas of focus for the workgroup, but several presentations also addressed technical interconnection matters including functionality of smart inverters, battery storage and microgrids. The tariff being created will act as a compensation mechanism for those customers who not only purchase power, but also produce power. The draft tariff is posted and comments are due January 10, 2018.

Six PURPAs Pending

PURPA stands for the Public Utility Regulatory Policies Act which is a federal law that encourages competition, conservation, reliability, and efficiency in generating and delivering electricity. As part of the Commission’s authority to implement the law, they must approve avoided cost numbers per utility that essentially dictate how attractive clean energy investment can be. This November, Consumers Energy’s PURPA case was the first newly approved cost numbers in 30 years. Six more cases remain (Alpena, DTE, Indiana Michigan, Northern States, Upper Peninsula, and Upper Michigan Energy Resources), but the Consumers case points toward Michigan being more attractive for renewable energy development.

Five Years per Plan

Section 6t of PA 341 requires the Commission, within 120 days of the effective date of the act and every five years thereafter, to commence a proceeding that among other things, establishes modeling scenarios and assumptions each electric utility should include in addition to its own scenarios and assumptions in developing its long term planning. 

Four Draft Scenarios

As part of the aforementioned 6t required modeling proceeding, the Commission drafted a proposal for possible scenarios and sensitivities that utilities should include when doing long term energy planning. There are a total of four unique scenarios included in the draft:

1. Business as usual
2. Emerging technologies (35% reduction in costs for demand response, EWR programs, and other emerging technologies)
3. Environmental policy (Carbon regulations targeting a 30% reduction from 2005 to 2030)
4. High market price variant (An increase in economic activity drives higher than expected energy market prices).

Three Public Hearings

To get feedback on the proposal, the Commission held three public hearings in September in Livonia, Grand Rapids, and Marquette.

Two Demand Response Studies

Section 6t of PA 341 requires the Commission to conduct an assessment for the use of demand response in Michigan. This assessment will ultimately be used as input for integrated resource plan modeling scenarios. The two studies done were a demand response potential study and market assessment. 

And a Partner in Clean Energy!

Thank you to the legislators who helped turn these bills into law and thank you to the Commission and commission staff who have been shepherding the process since. Michigan is better for it, the holidays will be warmer for it, and the new year will be brighter for it.