Michigan Integrated Resource Plan Primer

Planning is one of the most important exercises you can do to bring any vision or goal to life. That’s why 2016 Michigan energy law kickstarted a cycle of required long-term energy planning for utilities like Consumers and DTE called Integrated Resource Plans (IRP). These plans outline the role utilities will play in the state’s energy future and are approved or denied by the Michigan Public Service Commission. This blog will walk through what an integrated resource plan is, why these plans are so important, and what is required of utilities throughout the planning process. By better understanding the process and finding more opportunities to bring in the wants and concerns of the community, we can give customers more decision-making power in pursuit of safe, affordable, and reliable energy.

What is an Integrated Resource Plan (IRP)?

An IRP outlines the utility’s vision for how to provide energy to their customers. It requires the utility to best predict their customers’ power needs over the next fifteen to twenty years and describe how they plan to meet that need reliably and cost-effectively. Because there are so many different ways to meet customers’ needs, this case is the most comprehensive and illuminating process that we have. In these cases, you will see how much energy efficiency, wind, solar, gas, and demand response a utility plans to invest in, and when they plan to retire their coal plants—all in one place.

The plans do not delve too deeply into project specific details, but rather look to set up a pathway for broad buckets of resources. These pathways need to safely and reliably meet customer need, and must also be resilient to possible future risks. Recognizing that things change over time, the plans were designed by law to be repeated every five years so that utilities can course correct if necessary in their next plan. 

Still too complicated? Think of it as meal planning. You look out into next week and think about the three mouths you need to feed. You want your family to have energy for work and school, healthy and tasty options, and you don’t want to break the bank.  With those goals in mind, you then take into consideration how much each family member eats, dietary restrictions or preferences, and nutrition content, then you plan accordingly with your grocery list and equipment needs (tupperware, lunch box, reusable cutlery). Now imagine doing that for the next few decades and for millions of mouths—now you’re getting close to an IRP.

Why are Integrated Resource Plans Important?

When you envision the life you want, what do you see? Most likely you see a picture of a happy and healthy family, where you are comfortably employed and financially independent. Maybe you see yourself hiking Sleeping Bear Dunes or picnicking in Belle Isle Park with the sun shining, the sky clear, and the crisp, fresh air easy to breathe. Or, maybe even in June, you’re picturing the winter holidays with your family huddled around a lit Christmas tree, watching the snow fall from your warm, cozy couch. 

Believe it or not, the energy planning process is designed to make these moments possible by reducing air pollution, holding your home temperature just right, and keeping more money in your pocket instead of spent on energy bills. Through planning, we don’t have to leave our vision of a happy, healthy, and affordable today and tomorrow to chance. If customers and advocates push for what they want in the plan, then the hope is we will get good results. So, what gets put into the plan?

What’s Required in an Integrated Resource Plan?

By law, the utility’s plan must include certain information and explore multiple scenarios and sensitivities. Scenarios can be thought of as different possible futures and sensitivities are small tweaks within a scenario. Specific scenarios and sensitivities were designed by Commission staff with input from multiple stakeholders throughout much of 2017. In that year, filing requirements were established, two orders issued, five stakeholder meetings were held, two rounds of informal comment and reply comment on the draft were solicited, followed by one round of formal comments and reply comments. The final products were a planning factors guideline and instructions for how to file an integrated resource plan. Some of the factors include:

• Forecasting
  • A fancy word for predicting how much energy customers will need and what the most energy needed at any one point (peak).
• Renewable energy
  • Utilities must file expected renewable energy purchased or produced.
  • This must include a description of how combined renewable energy and energy waste reduction will compare to the state’s 35 percent goal. 
• Energy Waste Reduction
  • Energy waste reduction aka energy efficiency represents ways to permanently lower the amount of energy customers need. 
  • Utilities must file their energy efficiency plan levels.
• Demand Response
  • Demand response is a way to minimize or shift customer energy need to provide utilities temporary relief.
  • Utilities must file expected demand response program savings and costs.
• Environmental Policies
  • Utilities must file a plan for compliance with environmental rules, laws, and regulations including costs for compliance. 
• Transmission
  • Utilities must file an analysis of new or upgraded transmission options for the poles and wires that move higher levels of energy farther than your neighborhood distribution lines. 
• Current and Projected Generation and Fuel
  • Utilities must file an overview of their current utility generation portfolio—how much there is of each resource, their expected gas transportation or storage contracts for any new generation, and expected energy to be purchased or produced.

The scenarios, sensitivities, and other factors were created to help ensure a robust process that stress tests resource mixes to see how each compares with respect to affordability, reliability, adaptability, and environmental stewardship. Utilities use computer modeling software to help them do all the number crunching and run the scenarios and sensitivities, but they ultimately get to chose what inputs they put in and how to interpret and package the results. The four modeling scenarios required are:

• Business as Usual
  • Assuming a future with almost no change to the way things are.
• Emerging Technologies
  • Assuming a future with “aggressive investment” and lower costs for energy efficiency, demand response, and emerging technologies.
• High Market Price Variant
  • Assuming a future with fundamentally higher gas prices (for the Upper Peninsula utilities only).
• Environmental Policy
  • Assuming a future with a hard cap on carbon for 20-year horizon.

After the utility provides all the materials and information, and after hearing from other case participants, the Commission will decide whether the utility’s IRP is “the most reasonable and prudent” means of meeting their customers’ energy needs. They determine this by considering whether the plan appropriately balances many factors including: if it has adequate resources to provide power, if it complies with environmental regulations, if reliability is secured, if there is sufficient cost-effective energy waste and peak reductions, if pricing is competitive, if it is resilient to price and other risks, and if there are a diversity of resources so that not all of our eggs are in one basket. 

Public Engagement

Of important note in the instructions guide, is a section on stakeholder engagement and public outreach, saying:

Stakeholder engagement and public outreach process participant engagement early in the development of the IRP is strongly encouraged to: 

1. Educate potential participants on utility plans
2. Utilize a transparent decision-making process for resource planning
3. Create opportunity to provide feedback to the utility on its resource plan
4. Encourage robust and informed dialogue on resource decisions; and 
5. Reduce utility regulatory risk by building understanding and support for utility resource decisions. 

In the 12 months prior to the IRP filing, each utility is encouraged to host update workshops with interested participants. The purpose of the pre-filing workshop(s) is to ensure that participants have the opportunity to provide input and stay informed regarding: 

1. The assumptions, scenarios, and sensitivities
2. The progress of the utility’s IRP process; and
3. Plans for the implementation of the proposed IRP. 

A minimum of two stakeholder engagement workshops are recommended. A stakeholder engagement workshop will provide stakeholders with an opportunity to provide input regarding the utility’s assumptions, inputs, and modeling methodologies employed during the development of the IRP. The utility is encouraged to invite stakeholders, including expected intervenors and the Commission staff, to its stakeholder engagement workshops. If the stakeholder engagement workshops are not open to the public, two additional public meetings are recommended. 

The public meetings are intended to educate the public on the utility’s planning process as well as provide an opportunity for the public to comment. The public meetings should be offered in the utility’s service territory in geographic locations convenient to customers, with advanced notice provided to customers in the utility’s service territory. The utility is encouraged to consider holding public meetings after normal business hours to encourage attendance. If the utility chooses to hold pre-filing workshops, including stakeholder engagement workshops or public meetings, the utility shall prepare a public outreach report to document the outcomes of any pre-filing workshops, and shall file the report with the IRP application.

The Commission and Commission staff are clearly making strides to improve access and visibility to the process, but follow through from the utilities still leaves room for improvement. Many community members felt there was little publicity for the events, no clear outline of the plan and process, and that their concerns and feedback were not heard. Educational materials must be provided in multiple languages for example, more advance notice must be shared, and real dialogue must be facilitated. We are all collectively learning what real, meaningful community engagement means, but the only way to get there is by keeping sustained engagement—two meetings is not enough—and constantly improving ways to receive and incorporate feedback. Utilities cannot simply check a box.

What’s the Process for an Integrated Resource Plan?

IRPs follow the standard case flow from utility proposal to testimony to order (see rate case blog for more detail). The Commission has 300 days to approve, deny, or recommend changes to the utility’s filed IRP. 

• If they approve the plan, then the Commission grants cost approval for most likely the first three years of the plan. 
• If they recommend changes, the utility has 30 days to consider the recommended changes and submit a revised plan with one or more of the recommended changes. The Commission then has 30 days to issue a final order approving or denying the IRP. 
• If the Commission denies the IRP, the utility may submit a revised IRP within 60 days. The Commission will then begin a new contested case on the revised IRP and within 90 days of receiving the revised IRP, issue an order which: approves, denies with (minor) recommendations or denies with (major) recommendations. The Commission has up to 150 days after the utility files revised IRP to either approve or deny with recommendations.
  • The utility may pursue denied projects, even if not approved in IRP but without pre-approval of costs.

How to Participate in an Integrated Resource Plan

The process to decide utilities’ long term energy plans can seem complicated and feel like it’s only meant for technical professionals. It shouldn’t be. The Commission needs to hear what customers want even it’s big picture items. Customers are the ones using and paying for their energy and must have input.  Below are some of the ways you can be involved:

• Formal legal participation in the cases
• Attendance of open houses
  • The utilities held “open houses” where they shared high level overviews of their plans with the public and collected comments.
• Submit comments:
  • Mail (be sure to include case number): Executive Secretary Michigan Public Service Commission P.O. Box 30221 Lansing, Michigan 48909
  • E-mail: mpscefilecases@michigan.gov 
  • Statement at Public Hearing – Any written comments or e-mail sent to the Commission may be placed into the Commission's file on the case. 
• Or just call the customer assistance division: (517) 284-8160; (800) 292-9555

This is the third in a series of blogs aimed making the Michigan Public Service Commission and the decisions that take place there more accessible. In the Michigan Public Service Commission Primer blog, we learned about who the Michigan Public Service Commission is and what they do. In the Michigan Rate Case Primer, we learned the process behind rate cases and its equity implications.